Annual Report 2007 Bertelsmann Financial Highlights Key Figures (IFRS) 2007 2006 2005 2004 2003 in € millions Business Development Consolidated revenues 18,758 19,297 17,890 17,016 16,801 Operating EBIT 1,811 1,867 1,610 1,429 1,026 Operating EBITDA 2,467 2,548 2,274 2,112 1,866 Return on sales in percent1) 9.7 9.7 9.0 8.4 6.7 Bertelsmann Value Added (BVA2)) 133 101 28 3 – Net income 405 2,424 1,041 1,217 208 Investments 1,032 1,092 2,565 930 761 Bertelsmann Annual Report 2007 Consolidated Balance Sheet Equity 6,124 6,429 9,170 8,846 7,631 Equity ratio in percent 28.1 28.6 40.0 42.2 37.9 Total assets 21,776 22,498 22,932 20,970 20,164 Economic debt3) 6,330 6,760 3,931 2,632 3,227 Economic debt new4) 7,720 8,450 – – – Leverage factor5) 2.6 2.8 2.2 1.6 1.9 Leverage factor new 3.1 3.4 – – – Employees (in absolute numbers) Germany 36,832 34,336 32,570 27,350 27,064 Other countries 65,565 62,796 58,989 48,916 46,157 Total 102,397 97,132 91,559 76,266 73,221 Dividends to shareholders of Bertelsmann AG 120 120 287 324 220 Profi t participation payments 76 77 76 76 76 Employee profi t sharing 82 73 48 29 29 This overview shows the figures reported in the Annual 4) From 2008 extended definition: Net financial debt plus provi- Reports of preceding years. sions for pensions (taking into account IAS 19.93A), profit par- 1) Based on Operating EBIT ticipation capital and net present value of operating leases. 2) Bertelsmann uses the BVA as a controlling instrument to assess 5) Economic debt/Operating EBITDA (after modifications) the profitability of its operations and its return on capital. 3) Net financial debt plus provisions for pensions and profit participation capital Total Revenues by Division Operating EBIT by Division in percent* in percent* 29.6 RTL Group 51.9 RTL Group 9.5 Random House 9.2 Random House 14.7 Gruner + Jahr 14.0 Gruner + Jahr 7.5 BMG 5.0 BMG 25.5 Arvato 19.4 Arvato 13.2 Direct Group 0.5 Direct Group * Based on total from divisions not including Corporate/Consolidation Annual Report 2007 Bertelsmann Financial Highlights Key Figures (IFRS) 2007 2006 2005 2004 2003 in € millions Business Development Consolidated revenues 18,758 19,297 17,890 17,016 16,801 Operating EBIT 1,811 1,867 1,610 1,429 1,026 Operating EBITDA 2,467 2,548 2,274 2,112 1,866 Return on sales in percent1) 9.7 9.7 9.0 8.4 6.7 Bertelsmann Value Added (BVA2)) 133 101 28 3 – Net income 405 2,424 1,041 1,217 208 Investments 1,032 1,092 2,565 930 761 Bertelsmann Annual Report 2007 Consolidated Balance Sheet Equity 6,124 6,429 9,170 8,846 7,631 Equity ratio in percent 28.1 28.6 40.0 42.2 37.9 Total assets 21,776 22,498 22,932 20,970 20,164 Economic debt3) 6,330 6,760 3,931 2,632 3,227 Economic debt new4) 7,720 8,450 – – – Leverage factor5) 2.6 2.8 2.2 1.6 1.9 Leverage factor new 3.1 3.4 – – – Employees (in absolute numbers) Germany 36,832 34,336 32,570 27,350 27,064 Other countries 65,565 62,796 58,989 48,916 46,157 Total 102,397 97,132 91,559 76,266 73,221 Dividends to shareholders of Bertelsmann AG 120 120 287 324 220 Profi t participation payments 76 77 76 76 76 Employee profi t sharing 82 73 48 29 29 This overview shows the figures reported in the Annual 4) From 2008 extended definition: Net financial debt plus provi- Reports of preceding years. sions for pensions (taking into account IAS 19.93A), profit par- 1) Based on Operating EBIT ticipation capital and net present value of operating leases. 2) Bertelsmann uses the BVA as a controlling instrument to assess 5) Economic debt/Operating EBITDA (after modifications) the profitability of its operations and its return on capital. 3) Net financial debt plus provisions for pensions and profit participation capital Total Revenues by Division Operating EBIT by Division in percent* in percent* 29.6 RTL Group 51.9 RTL Group 9.5 Random House 9.2 Random House 14.7 Gruner + Jahr 14.0 Gruner + Jahr 7.5 BMG 5.0 BMG 25.5 Arvato 19.4 Arvato 13.2 Direct Group 0.5 Direct Group * Based on total from divisions not including Corporate/Consolidation Corporate Divisions at a Glance Bertelsmann AG RTL Group Random House Gruner + Jahr BMG Arvato Direct Group Bertelsmann AG 90.3 % Bertelsmann AG 100 % Bertelsmann AG 74.9 % Sony BMG Music Entertainment: Bertelsmann AG 100 % Bertelsmann AG 100 % Free float 9.7 % Jahr Family 25.1 % Bertelsmann AG 50 % Sony Corporation of America 50 % RTL Group is Europe’s leading entertainment group with holdings in The BMG division is mainly comprised of Sony BMG Music Entertain- 42 TV channels and 32 radio stations in ten countries, and in production ment, a joint venture between Bertelsmann and the Sony Corporation companies around the world. Bertelsmann owns approx. 90 percent of of America. The music major’s repertoire spectrum ranges from RTL Group, making it the principal shareholder of this Luxembourg- hip-hop to country, from classical to gospel, and from pop to rock. based listed company. www.rtl-group.com www.bmg.com, www.sonybmg.com RTL Group 2007 2006 2005 2004 2003 in € millions BMG 2007 2006 2005 2004 2003 Revenues 5,707 5,640 5,112 4,878 4,452 in € millions Operating EBIT 1) 978 835 756 668 503 Revenues 1,456 2,017 2,128 2,547 2,712 Employees (in absolute numbers) 11,392 11,307 8,970 8,117 7,254 Operating EBIT 1) 93 173 177 162 54 Employees (in absolute numbers) 2,851 3,009 3,597 4,259 4,880 Random House is the world’s largest trade book publishing group. Its portfolio comprises more than 120 editorially independent imprints, With around 270 subsidiaries in 37 countries, Arvato AG is one of the which publish some 11,000 new books each year. Random House sells world’s largest internationally networked media and communication more than 500 million books annually. The group is a wholly owned services providers. Its operations include printing plants, call and ser- division of Bertelsmann. www.randomhouse.com vice centers, logistics services and optical storage media production. Arvato is a wholly owned division of Bertelsmann AG. Random House 2007 2006 2005 2004 2003 www.arvato.de in € millions Revenues 1,837 1,947 1,828 1,791 1,776 Arvato 2007 2006 2005 2004 2003 Operating EBIT 1) 173 182 166 140 115 in € millions Employees (in absolute numbers) 5,764 5,804 5,395 5,383 5,525 Revenues 4,917 4,782 4,365 3,756 3,639 Operating EBIT 1) 366 367 341 310 261 Employees (in absolute numbers) 51,846 46,584 42,155 33,813 31,405 The Gruner + Jahr media company is Europe’s biggest magazine pub- lisher. It publishes over 300 magazines, newspapers and Web sites in more than 20 countries. 74.9 percent of the Hamburg-based com- Direct Group Bertelsmann operates media clubs, bookstores, internet pany is owned by Bertelsmann; the Jahr publishing family owns businesses and publishers in 21 countries. It has a comprehensive 25.1 percent. www.guj.de network of outlets comprising over 800 club centers and bookstores. Direct Group is wholly owned by Bertelsmann. Gruner + Jahr 2007 2006 2005 2004 2003 www.directgroup.de in € millions Revenues 2,831 2,861 2,624 2,439 2,481 Direct Group 2007 2006 2005 2004 2003 Operating EBIT 1) 264 277 250 210 233 in € millions Employees (in absolute numbers) 14,448 14,529 13,981 11,671 11,352 Revenues 2,555 2,665 2,384 2,175 2,286 The FSC Logo identifi es products which contain wood from Operating EBIT 1) 10 110 53 32 4 well managed forests certifi ed in accordance with the rules Employees (in absolute numbers) 15,109 14,996 13,493 12,116 11,893 This overview shows the figures reported in the Annual Reports of preceding years. of the Forest Stewardship Council. 1) With effect from January 1, 2004, Bertelsmann has used Operating EBIT to measure income from operating activity. The figure for the 2003 fiscal year was adjusted for the sake of comparability. Annual Report 2007 Company Information Financial Information 02 The Management 53 Detailed Index 02 Interview CEO 08 Executive Board 54 Group Management Report 10 The Group 78 Consolidated Financial Statements 10 Bertelsmann Essentials 78 Consolidated Income Statement 12 Corporate Responsibility 79 Consolidated Balance Sheet 14 Customer Focus 80 Consolidated Cash Flow Statement 81 Consolidated Statement of Recognized 16 Divisions Income and Expense 16 RTL Group 82 Segment Reporting 22 Random House 84 Notes 28 Gruner + Jahr 34 BMG 144 Corporate Governance 40 Arvato 46 Direct Group 146 Report of the Supervisory Board 148 Boards/Mandates 148 Supervisory Board 150 Executive Board 151 Additional Information 151 Auditor‘s report 152 Responsibility Statement 153 Selected Terms at a Glance 154 Financial Calendar/Contact 155 Production Credits Bertelsmann Annual Report 2007 2 The Management Interview CEO hartmut ostrowski Chairman and CEO, Bertelsmann AG On the rooftop terrace of Bertelsmann’s Berlin premises “Bertelsmann Unter den Linden 1” Bertelsmann Annual Report 2007 The Management The Group Divisions Financial Information 3 Interview CEO Executive Board » Creating Value through Growth« 2007 was a signifi cant year for Bertelsmann.