e6vk
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

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

For the month of April 2003

Commission File Number 1-14540

DEUTSCHE TELEKOM AG

(Translation of registrant’s name into English)

Friedrich-Ebert-Allee 140
53113 Bonn
Germany

(Address of principal executive offices)

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

     
Form 20-F          X        Form 40-F               

     Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b)(1): _______

     Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b)(7): _______

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

     
Yes              No      X     

This Report on Form 6-K is incorporated by reference into the registration
statements on Form F-3, File Nos. 333-12096, 333-13550 and 333-84510, and into each
respective prospectus that forms a part of those registration statements.

TABLE OF CONTENTS

Unaudited Pro Forma Combined Condensed Financial Statements
SIGNATURE

Table of Contents

DEUTSCHE TELEKOM AG

Unaudited Pro Forma Combined Condensed Financial Statements

On March 13, 2003, Deutsche Telekom AG (“Deutsche Telekom”) sold its six remaining cable TV businesses and related central operations (“Kabel Business”) to an investor consortium made up of Apax Partners, Goldman Sachs Capital Partners and Providence Equity for total cash consideration of EUR 1,779 million (the “Kabel Disposition”). The agreement relating to the Kabel Disposition also contains a provision that entitles Deutsche Telekom to receive contingent additional sales consideration if certain future performance targets are achieved.

The unaudited pro forma combined condensed financial statements have been prepared to give effect to the Kabel Disposition discussed above along with these previously consummated transactions:

The acquisition of T-Mobile U.S.A., Inc., formerly known as Voicestream Wireless Corporation, for cash and stock consideration on May 31, 2001 (the “VoiceStream Acquisition”), and

The acquisition of the remaining outstanding shares of T-Mobile Netherlands, formerly known as BEN Nederland Holding B.V (“BEN”), for cash on September 30, 2002 (the “BEN Acquisition”)

The pro forma effects of the VoiceStream Acquisition and the BEN Acquisition have been previously submitted on Form 6-K on September 30, 2002 and included as exhibit I herein.

The unaudited pro forma combined condensed financial statements have been prepared to combine the historical financial statements of Deutsche Telekom and the effects of the above described transactions as though these transactions had occurred as of June 30, 2002 for the unaudited pro forma combined condensed balance sheet and as of January 1, 2001 for the unaudited pro forma combined condensed statements of operations for the six months ended June 30, 2002 and for the year ended December 31, 2001.

The unaudited pro forma combined condensed financial statements are based on the unaudited historical condensed consolidated balance sheet and statement of operations of Deutsche Telekom as of and for the six months ended June 30, 2002 and the audited historical statement of operations of Deutsche Telekom for the year ended December 31, 2001. The historical condensed consolidated financial statements of Deutsche Telekom are prepared in accordance with German generally accepted accounting principles (German GAAP), which differs in certain material respects from accounting principles generally accepted in the United States of America (U.S. GAAP). The principal differences between German GAAP and U.S. GAAP applicable to the historical financial statements of Deutsche Telekom are summarized in Note 38 to the audited historical financial statements of Deutsche Telekom included in its annual report on Form 20-F/A filed with the U.S. Securities and Exchange Commission on June 18, 2002. The Kabel Disposition did not have a material impact on the U.S. GAAP reconciliation.

These unaudited pro forma combined condensed financial statements are presented for illustrative purposes only. The pro forma adjustments included herein are based on available information and certain assumptions that management believes are reasonable and are described in the accompanying notes to the unaudited pro forma combined condensed financial statements. The unaudited pro forma combined condensed financial statements do not necessarily represent what Deutsche Telekom’s financial position or results of operations would have been had the VoiceStream Acquisition, BEN Acquisition, or the Kabel Disposition occurred on such dates or to project Deutsche Telekom’s financial position or results of operations at or for any future date or period. In the opinion of management, all adjustments necessary to present fairly the unaudited pro forma combined condensed financial statements have been made. The unaudited pro forma combined condensed financial statements should be read in conjunction with the historical consolidated financial statements of Deutsche Telekom.

 

Table of Contents

Deutsche Telekom AG
Unaudited Pro Forma Combined Condensed Statement of Operations
For the Year Ended December 31, 2001
(in euros)
(in millions, except per-share amounts)

                                                                 
                Pro Forma                                
      T-Mobile   T-Mobile   Deutsche Telekom,                          
    Deutsche   USA   Netherlands   T-Mobile USA   Disposition                  
    Telekom AG   Pro Forma   Pro Forma   and T-Mobile   Kabel   Pro Forma           Pro Forma
    Historical   Adjustments   Adjustments   Netherlands   Business   Adjustments           As Adjusted
   
 
 
 
 
 
         
    Note 1   Note 2a   Note 2b       Note 5   Note 6            
Total operating performance
     49,188       1,447       448       51,083       (608 )     262               50,737  
 
    
     
     
     
     
     
             
 
Other operating income
     6,619       9       —       6,628       (21 )     60      (6b )           6,667  
Goods and services purchased
     (13,477 )     (502 )     (521 )     (14,500 )     11       (20 )    (6b )           (14,509 )
Personnel costs
     (12,114 )     (263 )     (41 )     (12,418 )     145                       (12,273 )
Depreciation and amortization
     (15,221 )     (1,398 )     (273 )     (16,892 )     325                       (16,567 )
Other operating expenses
     (12,151 )     (998 )     —       (13,149 )     108       (29 )    (6b )           (13,070 )
Financial income (expense), net
     (5,348 )     (439 )     21       (5,766 )     (8 )     121      (6a )           (5,653 )
 
    
     
     
     
     
     
             
 
Results from ordinary business activities
     (2,504 )     (2,144 )     (366 )     (5,014 )     (48 )     394               (4,668 )
 
    
     
     
     
     
     
             
 
Taxes
     (808 )     50       54       (704 )     —       —               (704 )
 
    
     
     
     
     
     
             
 
Income (loss) after taxes
     (3,312 )     (2,094 )     (312 )     (5,718 )     (48 )     394               (5,372 )
(Income) loss applicable to minority shareholders
     (142 )     (5 )     —       (147 )     —       —               (147 )
 
    
     
     
     
     
     
             
 
Net income (loss)
     (3,454 )     (2,099 )     (312 )     (5,865 )     (48 )     394               (5,519 )
 
    
     
     
     
     
     
             
 
Income (loss) in accordance with U.S. GAAP prior to cumulative effect of prior years from implementation of SFAS 133
     153       (1,422 )     (286 )     (1,555 )     (48 )     394               (1,209 )
 
    
     
     
     
     
     
             
 
Loss per share under German GAAP
     (0.93 )                     (1.42 )                             (1.34 )
 
    
                     
                             
 
Basic and diluted earnings (loss) per share under U.S. GAAP before implementation of SFAS 133
     0.04                       (0.38 )                             (0.30 )
 
    
                     
                             
 

See accompanying notes to unaudited pro forma combined condensed financial statements

 

Table of Contents

Deutsche Telekom AG
Unaudited Pro Forma Combined Condensed Balance Sheet
As of June 30, 2002
(in euros)
(in millions)

                                                             
                                                         
            T-Mobile   Pro Forma                            
        Deutsche   Netherlands   Deutsche Telekom   Disposition                    
        Telekom AG   Pro Forma   and T-Mobile   Kabel   Pro Forma           Pro Forma
        Historical   Adjustments   Netherlands   Business   Adjustments           As Adjusted
       
 
 
 
 
         
        Note 1   Note 2b       Note 3   Note 4            
ASSETS
                                                        
 
Non-current Assets
                                                        
   
Intangible assets
     74,616       2,543       77,159       (61 )                     77,098  
   
Property, plant and equipment
     55,877       467       56,344       (1,578 )                     54,766  
   
Financial assets
     5,800       (794 )     5,006       (4 )                     5,002  
 
Total noncurrent assets
     136,293       2,216       138,509       (1,643 )                     136,866  
 
    
     
     
     
     
             
 
 
Current Assets
                                                        
   
Inventories
     1,624       18       1,642       (15 )                     1,627  
   
Receivables
     6,495       (168 )     6,327       (97 )     183      (4a )           6,413  
   
Other assets
     3,948       —       3,948       (9 )                     3,939  
 
                             1,758       (1,758 )    (4b )              
   
Marketable securities
     577       —       577                               577  
   
Liquid assets
     1,806       38       1,844       (64 )                     1,780  
 
    
     
     
     
     
             
 
 
Total current assets
     14,450       (112 )     14,338       1.573       (1,575 )             14,336  
 
    
     
     
     
     
             
 
 
Prepaid and deferred charges
     1,362       8       1,370       (2 )                     1,368  
 
Total Assets
     152,105       2,112       154,217       (72 )     (1,575 )             152,570  
 
    
     
     
     
     
             
 

See accompanying notes to unaudited pro forma combined condensed financial statements

 

Table of Contents

                                                             
                                                 
            T-Mobile   Pro Forma                            
        Deutsche   Netherlands   Deutsche Telekom   Disposition                    
        Telekom AG   Pro Forma   and T-Mobile   Kabel   Pro Forma           Pro Forma
        Historical   Adjustments   Netherlands   Business   Adjustments           As Adjusted
       
 
 
 
 
         
        Note 1   Note 2b       Note 3   Note 4            
SHAREHOLDERS’ EQUITY
AND LIABILITIES
                                            
 
Shareholders’ Equity
                                                        
   
Capital shares
     10,746       —       10,746                               10,746  
   
Additional paid-in capital
     50,073       —       50,073                               50,073  
   
Retained earnings (deficit)
     (166 )     —       (166 )             184      (4d )           18  
   
Unappropriated net loss carried forward from previous year
     (4,892 )     —       (4,892 )                             (4,892 )
   
Net loss
     (3,891 )     —       (3,891 )                             (3,891 )
   
Minority interest
     3,330       —       3,330                               3,330  
 
    
     
     
     
     
             
 
 
     55,200       —       55,200       —       184               55,384  
 
    
     
     
     
     
             
 
 
Accruals
                                                        
   
Pension and similar obligations
     3,755       —       3,755       —                       3,755  
   
Other accruals
     14,612       77       14,689       —                       14,689  
 
    
     
     
     
     
             
 
 
     18,367       77       18,444       —       —               18,444  
 
    
     
     
     
     
             
 
 
Liabilities
                                                        
   
Debt
     66,910       1,977       68,887       (40 )     (1,779 )    (4c )           67,068  
   
Other liabilities
     10,706       34       10,740       (32 )     20      (4a )           10,728  
 
    
     
     
     
     
             
 
 
Total liabilities
     77,616       2,011       79,627       (72 )     (1,759 )             77,796  
 
    
     
     
     
     
             
 
 
Deferred income
     922       24       946               —               946  
 
    
     
     
     
     
             
 
Total Shareholders’ Equity and Liabilities
     152,105       2,112       154,217       (72 )     (1,575 )             152,570  
 
    
     
     
     
     
             
 
Shareholders’ Equity Under German GAAP
     55,200       —       55,200       —       184               55,384  
 
    
     
     
     
     
             
 
Shareholders’ Equity Under U.S. GAAP
     63,099       47       63,146       —       184               63,330  
 
    
     
     
     
     
             
 

See accompanying notes to unaudited pro forma combined condensed financial statements

 

Table of Contents

DEUTSCHE TELEKOM AG
Unaudited Pro Forma Combined Condensed Statement of Operations
For the Six Months Ended June 30, 2002
(In euros)
(In millions, except per share amounts)

                                                         
                                             
        T-Mobile   Pro Forma                            
    Deutsche   Netherlands   Deutsche Telekom   Disposition                    
    Telekom AG   Pro Forma   and T-Mobile   Kabel   Pro Forma           Pro Forma
    Historical   Adjustments   Netherlands   Business   Adjustments           As Adjusted
   
 
 
 
 
         
    Note 1   Note 2b       Note 5   Note 6            
Total Operating Performance
     26,238       238       26,476       (322 )     112               26,266  
 
    
     
     
     
     
             
 
Other operating income
     1,780       —       1,780       (34 )     11      (6b )           1,757  
Goods and services purchased
     (6,847 )     (112 )     (6,959 )     27       (6 )    (6b )           (6,938 )
Personnel costs
     (6,498 )     (28 )     (6,526 )     77                       (6,449 )
Depreciation and amortization
     (7,874 )     (157 )     (8,031 )     156       (20 )    (6b )           (7,895 )
Other operating expenses
     (7,114 )     (121 )     (7,235 )     94       (5 )    (6b )           (7,146 )
Financial income (expense), net
     (2,930 )     (15 )     (2,945 )     (6 )     (28 )    (6b )           (2,904 )
 
                                     75      (6a )              
 
                                    
                 
Results from ordinary business activities
     (3,245 )     (195 )     (3,440 )     (8 )     139               (3,309 )
 
    
     
     
     
     
             
 
Taxes
     (490 )     33       (457 )     (5 )                     (462 )
 
    
     
     
     
     
             
 
Income (loss) after taxes
     (3,735 )     (162 )     (3,897 )     (13 )     139               (3,771 )
(Income) loss applicable to minority shareholders
     (156 )     —       (156 )     —       —               (156 )
 
    
     
     
     
     
             
 
Net income (loss)
     (3,891 )     (162 )     (4,053 )     (13 )     139               (3,927 )
 
    
     
     
     
     
             
 
Net income (loss) in accordance with U.S. GAAP
     (5,059 )     (29 )     (5,088 )     (13 )     139               (4,962 )
 
    
     
     
     
     
             
 
Loss per share under German GAAP
     (0.93 )             (0.97 )                             (0.94 )
 
    
             
                             
 
Basic and diluted loss per share under U.S. GAAP
     (1.21 )             (1.22 )                             (1.19 )
 
    
             
                             
 

See accompanying notes to unaudited pro forma combined condensed financial statements

 

Table of Contents

NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS
(In Euros, except as otherwise indicated)
(In millions)

Note 1

These columns reflect Deutsche Telekom’s historical unaudited condensed consolidated balance sheet as of June 30, 2002, unaudited condensed consolidated statement of operations for the six months ended June 30, 2002, and the audited statement of operations for the year ended December 31, 2001, prepared and presented in accordance with German GAAP, and reconciled to U.S. GAAP.

Note 2

     
a)
   The pro forma adjustments related to the “VoiceStream Acquisition” are derived from the unaudited pro forma combined condensed financial statements related to that transaction which have been previously submitted on Form 6-K on September 30, 2002.
 
  
b)
   The pro forma adjustments related to Deutsche Telekom’s acquisition of the remaining outstanding shares of T-Mobile Netherlands, formerly known as BEN Nederland Holding B.V (“BEN”) on September 30, 2002 (the “BEN Acquisition”) are derived from the unaudited combined condensed pro forma financial statements related to that transaction which have been previously submitted on Form 6-K on September 30, 2002.

The unaudited pro forma combined condensed financial statements prepared in connection with the BEN Acquisition, which also include pro forma adjustments related to the VoiceStream Acquisition, have been included in this Form 6-K on Exhibit I.

The unaudited pro forma combined condensed financial statements do not give effect to the impairment charges recorded during the quarter ended September 30, 2002 under German GAAP and also as part of Deutsche Telekom’s annual test in accordance with Statement of Financial Accounting Standards No. 142 under U.S. GAAP.

Note 3

The unaudited pro forma combined condensed balance sheet includes pro forma adjustments to deconsolidate the assets and liabilities sold in connection with the Kabel Disposition.

Note 4

The unaudited pro forma combined condensed balance sheet includes adjustments to a) recognize intercompany receivables and payables relating to the Kabel Business, which had been eliminated in Deutsche Telekom’s June 30, 2002 unaudited condensed consolidated historical balance sheet; b) eliminate the investment representing the net assets of the Kabel Business; c) recognize the receipt of cash proceeds on the sale and its immediate application towards debt repayment; and d) recognize in retained earnings (deficit) the estimated gain on sale. The agreement to the Kabel Disposition also contains a provision that entitles Deutsche Telekom to receive additional sales consideration if certain future performance targets are achieved. The unaudited pro forma combined condensed financial statements do not give effect to this contingent consideration. In addition, the unaudited pro forma combined condensed financial statements do not reflect selling costs or taxes related to the Kabel Disposition.

Note 5

The unaudited pro forma combined condensed statements of operations include pro forma adjustments to eliminate the revenues and expenses related to the Kabel Business.

The unaudited pro forma combined condensed statements of operations do not include any gain recognition on disposition.

Note 6

     
a)
   The unaudited pro forma combined condensed statements of operations include an adjustment to reduce interest expense resulting from the assumed pay-down of debt with the proceeds received on sale. The reduction in interest expense was calculated using Deutsche Telekom’s average effective interest rate on fixed rate bonds and debentures of 8.41% for the six months ended June 30, 2002 and 6.81% for the year ended December 31, 2001.
 
  
b)
   The unaudited pro forma combined condensed statements of operations include pro forma adjustments for the recognition of certain revenues earned and expenses incurred between Deutsche Telekom and the Kabel Business, which had been previously eliminated in the consolidation of Deutsche Telekom’s historical statements of operations for the six months ended June 30, 2002 and for the year ended December 31, 2001.

Note 7

There are no significant U.S. GAAP adjustments to record to the unaudited pro forma combined condensed financial statements related to the Kabel Disposition.

 

Table of Contents

Exhibit I

DEUTSCHE TELEKOM AG
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma condensed combined financial statements combine the historical consolidated balance sheet of Deutsche Telekom AG (“Deutsche Telekom”) and Ben Nederland Holding B.V. (“BEN”) and the statements of operations of Deutsche Telekom, VoiceStream Wireless Corporation (“VoiceStream”), and BEN. Deutsche Telekom merged with VoiceStream effective May 31, 2001 in a transaction accounted for as a purchase business combination. Further, effective September 30, 2002 Deutsche Telekom is acquiring the remaining 50 percent plus one share in BEN through T-Mobile International AG, a wholly owned subsidiary of Deutsche Telekom. These pro forma financial statements give effect to the Deutsche Telekom/VoiceStream merger and the acquisition by T-Mobile International of the remaining 50 percent plus one share in BEN, as if the combinations had occurred on January 1, 2001.

We derived this information from the audited consolidated financial statements of Deutsche Telekom and BEN for the year ended December 31, 2001, the interim unaudited condensed consolidated financial statements of Deutsche Telekom and BEN as of and for the six months ended June 30, 2002, and the audited statement of operations of VoiceStream for the five months ended May 31, 2001. This information is only a summary and you should read it in conjunction with the historical financial statements and related notes of Deutsche Telekom, VoiceStream, and BEN, and other information included in this filing or incorporated by reference.

The VoiceStream statement of operations has been converted from U.S. GAAP to German GAAP to be presented on a consistent basis with Deutsche Telekom. The BEN balance sheet and statements of operations have been converted from Dutch GAAP to German GAAP to be presented on a consistent basis with Deutsche Telekom. The accounting policies of Deutsche Telekom, VoiceStream, and BEN are substantially comparable, although certain reclassifications have been made to VoiceStream’s and BEN’s historical presentation to conform to Deutsche Telekom’s financial statement presentation. These reclassifications do not materially impact VoiceStream’s or BEN’s result of operations for the periods presented.

These unaudited pro forma condensed combined balance sheet and statements of operations have been prepared in accordance with German GAAP, which is reconciled to U.S. GAAP. The differences between German GAAP and U.S. GAAP are summarized in the accompanying Notes 14, 15, and 16.

These unaudited pro forma condensed combined balance sheet and statements of operations are for illustrative purposes only. Deutsche Telekom, VoiceStream, and BEN may have performed differently had they always been combined. You should not rely on the unaudited pro forma condensed combined balance sheet and statements of operations as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined companies will experience after the combinations.

 

Table of Contents

DEUTSCHE TELEKOM AG

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
(BEN ACQUISITION)
As of June 30, 2002
(In euros)
(In millions)

                                         
            As Reported                   Pro forma
            BEN Adjusted   BEN           Deutsche
    Deutsche   for German   Acquisition           Telekom and
    Telekom   GAAP   Adjustments           BEN
   
 
 
         
    Note 1   Notes 2 and 18                        
ASSETS
                                        
Non-Current Assets
                                        
Intangible assets
     74,616       500       2,043  (3)             5,006  
Property, plant and equipment
     55,877       467       —               77,159  
Financial assets
     5,800       —       (794 )(4)             56,344  
 
    
     
     
             
 
 
     136,293       967       1,249               138,509  
 
    
     
     
             
 
Current Assets
                                        
Inventories
     1,624       18       —               1,642  
Receivables
     6,495       86       (254 )(5)             6,327  
Other assets
     3,948       —       —               3,948  
Marketable securities
     577       —       —               577  
Liquid assets
     1,806       38       —               1,844  
 
    
     
     
             
 
 
     14,450       142       (254 )             14,338  
 
    
     
     
             
 
Prepaid expenses, deferred charges and deferred taxation
     1,362       8       —               1,370  
 
    
     
     
             
 
 
     152,105       1,117       995               154,217  
 
    
     
     
             
 
SHAREHOLDERS’ EQUITY AND LIABILITIES
                                        
Shareholders’ Equity
                                        
Capital shares
     10,746       91       (91 )(6)             10,746  
Additional paid-in capital
     50,073       1,139       (1,139 )(6)             50,073  
Retained earnings (deficit)
     (166 )     (655 )     655  (6)             (166 )
Unappropriated net loss carried forward from previous year
     (4,892 )     —       —               (4,892 )
Net loss
     (3,891 )     (100 )     100  (7)             (3,891 )
Minority interest
     3,330       —       —               3,330  
 
    
     
     
             
 
 
     55,200       475       (475 )             55,200  
 
    
     
     
             
 
Accruals
                                        
Pension and similar obligations
     3,755       —       —               3,755  
Other accruals
     14,612       77       —               14,689  
 
    
     
     
             
 
 
     18,367       77       —               18,444  
 
    
     
     
             
 
Liabilities
                                        
Debt
     66,910       —       1,977  (8)             68,887  
Other liabilities
     10,706       541       (507 )(9)             10,740  
 
    
     
     
             
 
 
     77,616       541       1,470               79,627  
 
    
     
     
             
 
Deferred income
     922       24       —               946  
 
    
     
     
             
 
 
     152,105       1,117       995               154,217  
 
    
     
     
             
 
Shareholders’ Equity Under German GAAP
     55,200       475       (475 )             55,200  
U.S. GAAP reconciling items (Note 14)
     7,899       70       (23 )             7,946  
 
    
     
     
             
 
Shareholders’ Equity Under U.S. GAAP
     63,099       545       (498 )             63,146  
 
    
     
     
             
 

See Notes to the Unaudited Pro Forma Condensed Combined Financial Statements

 

Table of Contents

DEUTSCHE TELEKOM AG

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(BEN ACQUISITION)
For the Six Months Ended June 30, 2002
(In euros)
(In millions, except per share amounts)

                                         
            As Reported                   Pro forma
            BEN Adjusted   BEN           Deutsche
    Deutsche   for German   Acquisition           Telekom
    Telekom   GAAP   Adjustments           and BEN
   
 
 
         
    Note 1   Notes 2, 19                        
Net revenue
     25,754       238       —               25,992  
Other own capitalized costs
     484       —       —               484  
 
    
     
     
             
 
Total operating performance
     26,238       238       —               26,476  
Other operating income
     1,780       —       —               1,780  
Goods and services purchased
     (6,847 )     (112 )     —               (6,959 )
Personnel costs
     (6,498 )     (28 )     —               (6,526 )
Depreciation and amortization
     (7,874 )     (68 )     (89 )(11)             (8,031 )
Other operating expenses
     (7,114 )     (121 )     —               (7,235 )
Financial income (expenses), Net
     (2,930 )     (9 )     (6 )(12a)             (2,945 )
 
    
     
     
             
 
Results from ordinary business Activities
     (3,245 )     (100 )     (95 )             (3,440 )
Taxes
     (490 )     —       33  (13)             (457 )
 
    
     
     
             
 
Loss after taxes
     (3,735 )     (100 )     (62 )             (3,897 )
Loss applicable to minority Shareholders
     (156 )     —       —               (156 )
 
    
     
     
             
 
Net loss
     (3,891 )     (100 )     (62 )             (4,053 )
U.S. GAAP reconciling items (Note 15)
     (1,168 )     23       110               (1,035 )
 
    
     
     
             
 
Net income (loss) in accordance with U.S. GAAP
     (5,059 )     (77 )     48               (5,088 )
 
    
     
     
             
 
Loss per share under German GAAP (Note 17)
     (0.93 )                             (0.97 )
 
    
                             
 
Basic and diluted earnings (loss) per share under U.S. GAAP (Note 17)
     (1.21 )                             (1.22 )
 
    
                             
 

See Notes to the Unaudited Pro Forma Condensed Combined Financial Statements

 

Table of Contents

DEUTSCHE TELEKOM AG

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(VOICESTREAM AND BEN ACQUISITIONS)
For the Year Ended December 31, 2001
(In euros)
(In millions, except per share amounts)

                                                                         
                                                                    Pro forma
            VoiceStream                   Pro forma   As Reported                   Deutsche
            January 1,   VoiceStream           Deutsche   BEN Adjusted   BEN           Telekom,
    Deutsche   2001 through   Merger           Telekom and   for German   Acquisition           VoiceStream,
    Telekom   May 31, 2001   Adjustments           VoiceStream   GAAP   Adjustments           and BEN
   
 
 
         
 
 
         
    Note 1   Notes 2, 21                           Notes 2, 20                        
Net revenue
     48,309       1,377       —               49,686       448       —               50,134  
Other own capitalized costs
     879       70       —               949       —       —               949  
 
    
     
     
             
     
     
             
 
Total operating performance
     49,188       1,447       —               50,635       448       —               51,083  
Other operating income
     6,619       9       —               6,628       —       —               6,628  
Goods and services purchased
     (13,477 )     (502 )     —               (13,979 )     (521 )     —               (14,500 )
Personnel costs
     (12,114 )     (313 )     50  (10)             (12,377 )     (41 )     —               (12,418 )
Depreciation and amortization
     (15,221 )     (648 )     (750 )(11)             (16,619 )     (99 )     (174 )(11)             (16,892 )
Other operating expenses
     (12,151 )     (998 )     —               (13,149 )     —       —               (13,149 )
Financial income (expenses), net
     (5,348 )     (285 )     (154 )(12c,d)             (5,787 )     (10 )     31  (12b)             (5,766 )
 
    
     
     
             
     
     
             
 
Results from ordinary business activities
     (2,504 )     (1,290 )     (854 )             (4,648 )     (223 )     (143 )             (5,014 )
Taxes
     (808 )     (18 )     68  (13)             (758 )     —       54  (13)             (704 )
 
    
     
     
             
     
     
             
 
Loss after taxes
     (3,312 )     (1,308 )     (786 )             (5,406 )     (223 )     (89 )             (5,718 )
Income applicable to minority shareholders
     (142 )     (5 )     —               (147 )     —       —               (147 )
 
    
     
     
             
     
     
             
 
Net loss
     (3,454 )     (1,313 )     (786 )             (5,553 )     (223 )     (89 )             (5,865 )
U.S. GAAP reconciling items (Note 16)
     3,607       42       635               4,284       38       (12 )             4,310  
 
    
     
     
             
     
     
             
 
Income (loss) in accordance with U.S GAAP prior to cumulative effect of prior years from implementation of SFAS 133 (Note 16)
     153       (1,271 )     (151 )             (1,269 )     (185 )     (101 )             (1,555 )
 
    
     
     
             
     
     
             
 
Loss per share under German GAAP (Note 17)
     (0.93 )                             (1.30 )                             (1.42 )
 
    
                             
                             
 
Basic and diluted earnings (loss) per share under U.S. GAAP before implementation of SFAS 133 (Note 17)
     0.04                               (0.30 )                             (0.38 )
 
    
                             
                             
 

See Notes to the Unaudited Pro Forma Condensed Combined Financial Statements

 

Table of Contents

DEUTSCHE TELEKOM AG

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
(VOICESTREAM AND BEN ACQUISITIONS)
(In euros, except as otherwise indicated)
(In millions, except per share amounts)

Note 1

These columns reflect Deutsche Telekom AG’s (“Deutsche Telekom”) historical unaudited condensed consolidated balance sheet as of June 30, 2002, unaudited condensed statements of operations for the six months ended June 30, 2002, and statements of operations for the year ended December 31, 2001, prepared and presented in accordance with German GAAP, and reconciled to U.S. GAAP.

On May 31, 2001, Deutsche Telekom completed the acquisition of VoiceStream Wireless Corporation (“VoiceStream”). Accordingly, subsequent to the merger date, VoiceStream results are included in Deutsche Telekom’s consolidated results. Pursuant to the VoiceStream merger agreement, VoiceStream shareholders received either 3.6693 shares of Deutsche Telekom stock and $15.73 (EUR 18.37) in cash, 3.6683 shares of Deutsche Telekom stock and $15.91 (EUR 18.58) in cash, or 3.7647 shares of Deutsche Telekom stock for each VoiceStream common share exchanged. The total purchase consideration was allocated to the estimated fair value of assets and liabilities acquired.

Effective September 30, 2002 Deutsche Telekom is acquiring the remaining 50 percent plus one share in BEN through T-Mobile International AG, a wholly owned subsidiary of Deutsche Telekom, for cash consideration of EUR 1.7 billion, bringing Deutsche Telekom’s total interest in BEN to 100 percent. We have previously accounted for our 50 percent less one share in connection with the March 2000 acquisition of BEN by the equity method of accounting. For purposes of these unaudited pro forma condensed combined financial statements, we have combined 100 percent of BEN’s balance sheet as of June 30, 2002 and 100 percent of BEN’s results of operations for the six months ended June 30, 2002 and the year ended December 31, 2001.

The aggregate purchase price and the purchase price allocations (preliminary for BEN) in accordance with German GAAP for 100 percent of VoiceStream and 50 percent plus one share in BEN are as follows:

                 
    VoiceStream   BEN
   
 
Consideration and merger costs:
                
Total value of shares issued in merger (a)
     24,881       —  
Cash payments
     4,938       1,723  
Fair value of options and warrants converted
     268       —  
Fair value of liabilities assumed inclusive of minority interest
     20,622       321  
Merger related costs
     185       —  
 
    
     
 
Total consideration and merger costs
     50,894       2,044  
 
    
     
 
Allocation of purchase price:
                
Current assets
     2,062       75  
Property, plant and equipment
     3,923       233  
Investments in unconsolidated affiliates
     554       —  
Licenses and other intangibles
     23,055       250  
Goodwill
     21,300       1,486  
 
    
     
 
Total allocation of purchase price
     50,894       2,044  
 
    
     
 

(a)   Deutsche Telekom issued 986,551,622 shares in conjunction with the VoiceStream merger.

 

Table of Contents

Note 2

These columns reflect BEN’s balance sheet as of June 30, 2002, and BEN’s statements of operations for the six months ended June 30, 2002 and the year ended December 31, 2001, and VoiceStream’s statement of operations for the five months ended May 31, 2001, prepared and presented in accordance with German GAAP, and reconciled to U.S. GAAP. The U.S. GAAP balance sheet and statement of operations of BEN as of and for the six months ended June 30, 2002, are derived from the unaudited BEN financial statements filed in this Current Report on Form 6-K. The U.S. GAAP statement of operations of BEN for the year ended December 31, 2001 is derived from the audited BEN financial statements provided in a Deutsche Telekom Current Report on Form 6-K dated May 23, 2002. The U.S. GAAP statement of operations of VoiceStream for the five month period ended May 31, 2001 is derived from the audited VoiceStream financial statements provided in a Deutsche Telekom Current Report on Form 6-K dated April 22, 2002. A summary of reconciling items between German GAAP and U.S. GAAP is disclosed in Notes 14, 15, and 16.

Certain reclassifications have been made to the historical financial information for VoiceStream and BEN to conform to Deutsche Telekom’s financial statement presentation. These reclassifications do not materially impact VoiceStream and BEN’s results of operations or financial position.

Note 3

The Deutsche Telekom/BEN acquisition will result in an allocation of the purchase price to the tangible and intangible assets and liabilities of BEN. The excess of the purchase price over the tangible net assets of BEN has been allocated to goodwill since no material intangible assets were identified in the preliminary purchase price allocation. The transaction is not expected to result in an incremental tax liability. The adjustment to intangible assets for the Deutsche Telekom/BEN acquisition relates to the goodwill resulting from the excess of the purchase price over the estimated fair value of the assets acquired as if the acquisition had occurred on June 30, 2002.

Note 4

This adjustment represents the elimination of Deutsche Telekom’s initial investment in BEN, which was accounted for on an equity basis, and the elimination of the accumulated equity pickup in loss related to BEN through June 30, 2002 included in Deutsche Telekom’s historical financial statements.

Note 5

As part of the BEN shareholder agreement, operating cash flow requirements of BEN are to be funded by its shareholders. At June 30, 2002, Deutsche Telekom had loans receivable from BEN aggregating to EUR 254 million which are eliminated.

Note 6

This adjustment represents the elimination of BEN’s existing capital, additional paid-in capital, and accumulated deficit as of June 30, 2002.

Note 7

This adjustment represents the elimination of the loss of BEN for the six months ended June 30, 2002.

Note 8

This adjustment represents mainly the EUR 1.7 billion to be borrowed to fund the cash consideration of the Deutsche Telekom/BEN acquisition. Additionally, as part of the BEN shareholder agreement, upon Deutsche Telekom acquiring the remaining 50 percent plus one share in BEN through T-Mobile International, any loans from the shareholders selling their interests have to be repaid. This adjustment also includes the debt funding of EUR 254 million for the repayment of the loans outstanding from the selling shareholders.

Note 9

This adjustment eliminates EUR 507 million in loans payable to shareholders included in BEN’s balance sheet at June 30, 2002 (See Note 5).

 

Table of Contents

Note 10

As part of the Deutsche Telekom/VoiceStream merger agreement, Deutsche Telekom agreed to pay existing VoiceStream management and employees retention and incentive bonuses. The payments are recorded as expenses in the periods subsequent to the merger. Since these costs are non-recurring in nature, the associated compensation expense has been eliminated from the pro forma statement of operations.

Note 11

These adjustments represent additional depreciation and amortization expense on tangible and intangible assets resulting from the increased basis in these assets after the purchase price allocations. These tangible and intangible assets are being amortized over their useful lives as follows:

         
Property, plant and equipment
   3 to 40 years
Goodwill
   12 to 20 years
Licenses
   15 to 20 years

See the discussion of the estimated effect in the year ended December 31, 2001 of the application of SFAS 142 related to the accounting for Goodwill and Licenses in Deutsche Telekom’s financial statements in Note 41(f) of the Deutsche Telekom audited consolidated financial statements for year ended December 31, 2001. See also the Current Report on Form 6-K provided by Deutsche Telekom on May 2, 2002.

Note 12

The pro forma adjustments related to financing income (expense) were as follows:

(a)  The pro forma adjustment for BEN in the amount of EUR 6 million for the six months ended June 30, 2002 includes EUR 83 million representing additional interest expense that would have been incurred in connection with Deutsche Telekom obtaining financing to fund the EUR 1.7 billion cash portion of the Deutsche Telekom/BEN acquisition consideration and the repayment of EUR 254 million in loans due to the selling shareholders, offset by EUR 77 million representing the elimination of the equity in loss of BEN included in Deutsche Telekom historical financial statements. Interest expense was calculated using Deutsche Telekom’s average effective interest rate on fixed rate bonds and debentures of 8.41% for the six months ended June 30, 2002.

(b)  The pro forma adjustment for BEN in the amount of EUR 30 million for the year ended December 31, 2001, includes EUR 135 million representing additional interest expense that would have been incurred in connection with Deutsche Telekom obtaining financing to fund the EUR 1.7 billion cash portion of the Deutsche Telekom/BEN acquisition consideration and the repayment of EUR 254 million in loans due to the selling shareholders, offset by EUR 165 million representing the elimination of the equity in loss of BEN included in Deutsche Telekom’s historical financial statements. Interest expense was calculated using Deutsche Telekom’s average effective interest rate on fixed rate bonds and debentures of 6.81% for the year ended December 31, 2001.

(c)  Deutsche Telekom obtained financing to fund its EUR 4.9 billion cash portion of the Deutsche Telekom/VoiceStream merger consideration. The pro forma adjustment of EUR 168.7 million for VoiceStream for the five months ended May 31, 2001 represents additional interest expense that would have been incurred had the merger occurred at the beginning of the period. Interest expense was calculated using Deutsche Telekom’s average effective interest rate on fixed rate bonds and debentures of 7.44% for the five months ended May 31, 2001.

(d)  As a result of the fair market value adjustments related to debt, a premium of EUR 703.1 million was recorded on the outstanding debt balances. The pro forma adjustment represents the amortization of this premium resulting in a reduction in interest expense of EUR 15.1 million for the five months ended May 31, 2001.

Note 13

This adjustment represents the income tax benefit resulting from the additional interest expense to be recognized by Deutsche Telekom for the six months ended June 30, 2002 and the year ended December 31, 2001 as described in Note 12.

 

Table of Contents

Note 14

     The following summarizes the principal adjustments to reconcile unaudited pro forma shareholders’ equity under German GAAP to the amounts that would have been reported had U.S. GAAP been applied:

                                                 
    June 30, 2002
   
            As Reported                           Pro forma
            BEN Adjusted           BEN           Deutsche
    Deutsche   for German           Acquisition           Telekom and
    Telekom (a)   GAAP           Adjustments           BEN
   
 
         
         
Shareholders’ equity under German GAAP
     55,200       475               (475 )(f)             55,200  
Valuation adjustments of fixed assets
     3,719       —               —               3,719  
Mobile communications licenses
     4,405       46 (b)             —               4,451  
Internally developed software
     448       —               —               448  
Effects of dilution gains
     1,345       —               —               1,345  
Goodwill and assets differences
     3,130       (7 )(c)             —               3,123  
Capitalization of interest costs, net of related amortization
     —       34 (d)             —               34  
Technical equipment leases
     —       (3 )(e)             —               (3 )
Write-down of tradenames
     797       —               —               797  
Unrealized gains on marketable securities
     514       —               —               514  
Derivatives and related foreign exchange differences
     402       —               —               402  
Accruals for personnel restructuring
     22       —               —               22  
Financing of fixed assets
     (63 )     —               —               (63 )
Deferral of gains on divestitures
     (21 )     —               —               (21 )
Deferred income
     (1,112 )     —               —               (1,112 )
Asset-backed securitization
     80       —               —               80  
Investments in equity investees
     (111 )     —               (23 )(b)             (134 )
Other differences
     (136 )     —               —               (136 )
Income taxes
     (2,190 )     —               —               (2,190 )
Minority interest
     (3,330 )     —               —               (3,330 )
 
    
     
             
             
 
Shareholders’ equity in accordance with U.S. GAAP
     63,099       545               (498 )             63,146  
 
    
     
             
             
 

(a)   Deutsche Telekom’s German GAAP to U.S. GAAP reconciling items are derived from Note 18 of the Deutsche Telekom’s unaudited condensed consolidated financial statements for the six months ended June 30, 2002.
 
(b)   Under German GAAP, license amortization commences on the date the license is acquired. Under U.S. GAAP, amortization of these licenses would commence upon the license being placed into service. The EUR 46 million adjustment reverses the amortization expense recognized under German GAAP during the non-operational period of the license, while the EUR 23 million adjustment represents the elimination of the originally recorded 50 percent less 1 share of the a djustment to eliminate the amortization expense recognized under German GAAP.
 
(c)   The EUR 7 million adjustment relates mainly to penalties received from a vendor by BEN during 1998 and 1999 as the vendor failed to meet certain contractual requirements with respect to the roll out of the network. These payments relate to refunds on amounts paid for network assets purchased. Under German GAAP these amounts were recorded as income. Under U.S. GAAP these payments are recorded as a deduction from the cost of the network assets resulting in a reduction of net income and the carrying value of network assets, and a reduction in depreciation expense related to these assets.
 
(d)   Under German GAAP, interest accumulated from borrowings related to the acquisition of UMTS licenses was not capitalized. Under U.S. GAAP, interest accumulated on borrowings related to the acquisition of UMTS licenses was capitalised and was amortized from the time the respective assets were placed in operation over an estimated useful life of 15 years.
 
(e)   During 1999, BEN entered into a sales lease back transaction relating to certain technical equipment. Under German GAAP, the net cash received was recognized as other operating revenues. Under US GAAP, the gross cash received and payment of liabilities are recognized on the balance sheet and the net cash gain on the transaction is recognized as other income over the lease term.
 
(f)   See Notes 3 through 9.

 

Table of Contents

Note 15

The following summarizes the principal adjustments to reconcile unaudited pro forma net loss under German GAAP to the amounts that would have been reported had U.S. GAAP been applied for the six month period ended June 30, 2002:

                                                 
    For the Six Months ended June 30, 2002
   
            As Reported                           Pro forma
            BEN Adjusted           BEN           Deutsche
    Deutsche   for German           Acquisition           Telekom and
    Telekom (a)   GAAP           Adjustments           BEN
   
 
         
         
Unaudited pro forma net loss under German GAAP
     (3,891 )     (100 )             (62 )             (4,053 )
Valuation adjustments of fixed assets
     498       —               —               498  
Mobile communications licenses
     1,553       20 (b)             (6 )(c)             1,567  
Internally developed software
     13       —               —               13  
Goodwill and asset differences
     1,321       —               116 (d)             1,437  
Write-down of tradenames
     (524 )     —               —               (524 )
Derivatives and related foreign exchange differences
     146       —               —               146  
Capital raising and financing costs
     (21 )     —               —               (21 )
Deferral of gains on divestitures
     300       —               —               300  
Deferred income
     (25 )     —               —               (25 )
Asset-backed securitization
     151       —               —               151  
Investment in equity investees
     24       —               —               24  
Other differences
     20       3 (c)             —               23  
Income taxes
     (4,624 )     —               —               (4,624 )
 
    
     
             
             
 
Unaudited pro forma net income (loss) in accordance with U.S GAAP
     (5,059 )     (77 )             48               (5,088 )
 
    
     
             
             
 

(a)   Deutsche Telekom’s German GAAP to U.S. GAAP reconciling items are derived from Note 18 of the Deutsche Telekom’s unaudited condensed consolidated financial statements for the six months ended June 30, 2002.
 
(b)   Under German GAAP, the acquisition costs of licenses are amortized from the time of acquisition over the expected period of usage, and the related interest on borrowings made to finance the acquisition of the licenses is recognized immediately as expense. Under U.S. GAAP, amortization of these licenses would commence upon the asset being placed into service, and the related interest on borrowings made to finance the acquisition of the licenses is capitalized and expensed over the same period. These adjustments reverse the amortization expense recognized under German GAAP during the non-operational period of the license and capitalize interest that was expensed for German GAAP purposes.
 
(c)   The application of German GAAP resulted in other differences from U.S. GAAP related to lease transactions and transactions with vendors for BEN.
 
(d)   The acquisition adjustments under German GAAP included an adjustment to record additional amortization expense on goodwill resulting from the estimated purchase price allocation (See Note 11). Furthermore, Deutsche Telekom’s historical results of operations under German GAAP for the six months ended June 30, 2002 include amortization expense on goodwill resulting from the acquisition of 50 percent less one share of BEN in March 2002. Under U.S. GAAP the amortization expense on goodwill recorded for German GAAP purposes is reversed, to give effect to the implementation of SFAS 142 effective January 1, 2002.

Note 16

The following summarizes the principal adjustments to reconcile net loss under German GAAP to the amounts that would have been reported had U.S. GAAP been applied for the year ended December 31, 2001:

 

Table of Contents

                                                         
                                    As                
                                    Reported           Pro forma
            VoiceStream           Pro forma   BEN           Deutsche
            January 1,   VoiceStream   Deutsche   Adjusted   BEN   Telekom,
    Deutsche   2001 through   Merger   Telekom and   for German   Acquisition   VoiceStream,
    Telekom (a)   May 31, 2001   Adjustments   VoiceStream   GAAP   Adjustments   and BEN
   
 
 
 
 
 
 
Unaudited pro forma net loss under German GAAP
     (3,454 )     (1,313 )     (786 )     (5,553 )     (223 )     (89 )     (5,865 )
Deferred financing
     —       (11 ) (b)     —       (11 )     —       —       (11 )
Valuation adjustments of fixed Assets
     443       —       —       443       —       —       443  
Mobile communications Licenses
     2,098       55 (c)     89 (c)     2,242       35 (c)     (12 ) (c)     2,265  
Internally developed software
     166       7 (d)     —       173       —       —       173  
Effects of dilution gains
     (396 )     —       —       (396 )     —       —       (396 )
Goodwill and asset differences
     (285 )     —       14 (f)     (271 )     —       —       (271 )
Write-down of tradenames
     1,040       —       —       1,040       —       —       1,040  
Value-added tax
     (27 )     —       —       (27 )     —       —       (27 )
Derivatives and related foreign exchange differences
     (31 )     —       —       (31 )     —       —       (31 )
Accruals for personnel restructuring
     10       —       —       10       —       —       10  
Financing of fixed assets
     (42 )     —       —       (42 )     —       —       (42 )
Deferral of gains on Divestitures
     27       —       —       27       —       —       27  
Deferred income
     (168 )     —       —       (168 )     —       —       (168 )
Asset-backed securitization
     (71 )     —       —       (71 )     —       —       (71 )
Investment in equity investees
     (182 )     —       —       (182 )     —       —       (182 )
Effects of full consolidation of Debis, net of tax
     (294 )     —       —       (294 )     —       —       (294 )
Other differences
     253       (9 ) (e)     (7 ) (g)     237       3 (i)     —       240  
Income taxes
     1,066       —       539 (h)     1,605       —       —       1,605  
 
    
     
     
     
     
     
     
 
Unaudited pro forma income (loss) in accordance with U.S. GAAP prior to cumulative effect of prior years from implementation of SFAS 133
     153       (1,271 )     (151 )     (1,269 )     (185 )     (101 )     (1,555 )
 
    
     
     
     
     
     
     
 

(a)   Deutsche Telekom’s German GAAP to U.S. GAAP reconciling items are derived from Note 38 of the Deutsche Telekom audited consolidated financial statements for year ended December 31, 2001.
 
(b)   Under German GAAP, financing costs are expensed as incurred. This adjustment is to amortize previously deferred financing costs over the term of the loan for U.S. GAAP purposes.
 
(c)   Under German GAAP, the acquisition costs of licenses are amortized from the time of the acquisition over the expected period of usage, and the related interest on borrowings made to finance the acquisition of the licenses is recognized immediately as expense. Under U.S. GAAP, amortization of these licenses would commence upon the asset being placed into service, and the related interest on borrowings made to finance the acquisition of the licenses is capitalized and expensed over the same period. This adjustment reverses the amortization expense recognized under German GAAP during the non-operational period of the license and capitalizes interest that was expensed for German GAAP purposes.
 
(d)   Under German GAAP, internal software development costs are not capitalized. This adjustment capitalizes and amortizes costs capitalizable for U.S. GAAP purposes.
 
(e)   Included in other differences are the following items:
 
(i)   Under U.S. GAAP, certain derivative adjustments are recorded in other comprehensive income. Under German GAAP, derivative adjustments are recorded against net income.
 
(ii)   For U.S. GAAP, costs such as leases are capitalized on cell sites not yet placed in service. For German GAAP, these costs are expensed.
 
(f)   The application of German GAAP results in differences from U.S. GAAP related to certain aspects of the accounting for the purchase of VoiceStream, which resulted in a higher goodwill balance for German GAAP than for U.S. GAAP. This adjustment reverses the additional amortization expense recognized under German GAAP.
 
(g)   Deferred compensation expense was recorded for U.S. GAAP in connection with the Deutsche Telekom/VoiceStream merger related to the intrinsic value of the unvested stock options for which future service is required. Under U.S. GAAP this

 

Table of Contents

    balance is expensed over the remaining future vesting periods of the VoiceStream grants estimated to be an average of three years. This adjustment record s the additional deferred compensation expense recognized under U.S. GAAP.
 
(h)   For German GAAP, the income tax benefit is not recorded until the company becomes taxable. Under U.S. GAAP, an income tax benefit is recorded related to net operating loss carryfo rwards. No valuation allowance has been recorded as the VoiceStream deferred tax liabilities recorded are anticipated to offset the deferred tax assets. See the discussion of the effect of the application of SFAS 142 on our financial statements in Note 41(f) of the Deutsche Telekom audited consolidated financial statements for year ended December 31, 2001 (regarding the recording of a valuation allowance with respect to VoiceStream deferred tax assets at January 1, 2002). See also the Current Report on Form 6-K provided by Deutsche Telekom on May 2, 2002.
 
(i)   The application of German GAAP resulted in other differences from U.S. GAAP related to lease transactions and transactions with vendors for BEN.

 

Table of Contents

Note 17

     The U.S. GAAP loss per share calculations are calculated before implementation of SFAS 133 for the year ended December 31, 2001. The following summarizes the pro forma loss per share calculation under German GAAP and U.S. GAAP for the six months ended June 30, 2002 and the year ended December 31, 2001:

                 
    June 30, 2002   December 31, 2001
   
 
German GAAP:
                
Pro forma net loss
     (4,053 )     (5,865 )
 
    
     
 
Weighted average Deutsche Telekom ordinary shares outstanding
     4,195       3,715  
Weighted average impact of shares issued in VoiceStream merger
     —       411  
 
    
     
 
Pro forma weighted average shares outstanding
     4,195       4,126  
 
    
     
 
Pro forma loss per share
     (0.97 )     (1.42 )
 
    
     
 
U.S. GAAP — Basic and dilutive:
                
Pro forma loss before implementation of SFAS 133
     (5,088 )     (1,555 )
Weighted average Deutsche Telekom ordinary shares outstanding
     4,157       3,676  
Weighted average impact of shares issued in VoiceStream merger
     —       411  
 
    
     
 
Pro forma weighted average shares outstanding
     4,157       4,087  
 
    
     
 
Basic and dilutive pro forma loss per share
     (1.22 )     (0.38 )
 
    
     
 

Note 18

The table below presents the adjustments to convert the BEN Dutch GAAP unaudited condensed consolidated balance sheet at June 30, 2002 derived from the unaudited BEN consolidated financial statements filed on this Current Report on Form 6-K to Deutsche Telekom’s accounting policies under German GAAP.

                                 
    June 30, 2002
   
                            BEN As
            German           Reported
    Historical   GAAP           Adjusted for
    BEN   Adjustments           German GAAP
   
 
         
    Note 20                        
ASSETS
                                
Non-Current Assets
                                
Intangible assets
     546       (46 )(a)             500  
Property, plant and equipment
     467       —               467  
 
    
     
             
 
 
     1,013       (46 )             967  
 
    
     
             
 
Current Assets
                                
Inventories
     18       —               18  
Receivables
     86       —               86  
Liquid assets
     38       —               38  
 
     142       —               142  
Prepaid Expenses, Deferred Charges and Deferred Taxation
     8       —               8  
 
    
     
             
 
 
     1,163       (46 )             1,117  
 
    
     
             
 
SHAREHOLDERS’ EQUITY AND LIABILITIES
                                
Shareholders’ Equity Capital shares
     91       —               91  
Additional paid-in capital
     1,139       —               1,139  
Retained deficit
     (621 )     (34 )(a)             (655 )
Net loss
     (88 )     (12 )(a)             (100 )
 
     521       (46 )             475  
 
    
     
             
 
Accruals
                                
Other accruals
     77       —               77  
 
    
     
             
 
 
     77       —               77  
 
    
     
             
 
Liabilities
                                
Other liabilities
     541       —               541  
 
    
     
             
 
 
     541       —               541  
 
    
     
             
 
Deferred Income
     24       —               24  
 
    
     
             
 
 
     1,163       (46 )             1,117  
 
    
     
             
 

 

Table of Contents

(a)   Under German GAAP, licenses amortization commences on the date the licenses are acquired. Under Dutch GAAP, amortization of these licenses would commence upon the licenses being placed into service. This adjustment records the amortization expense recognized under German GAAP not previously recognized under Dutch GAAP during the nonoperational period of the licenses.

Note 19

The table below presents the adjustments to convert BEN’s historical Dutch GAAP unaudited consolidated statement of operations for the six months ended June 30, 2002 to Deutsche Telekom’s accounting policies under German GAAP. The BEN unaudited consolidated financial statements for the six months ended June 30, 2002 are derived from the unaudited BEN consolidated financial statements provided with this Deutsche Telekom Current Report on Form 6-K.

                                 
    For the Six Months ended June 30, 2002
   
                            BEN
                            As Reported
            German           Adjusted for
    Historical   GAAP           German
    BEN   Adjustments           GAAP
   
 
         
    Note 22                        
Net revenue
     238       —               238  
Total operating performance
     238       —               238  
Goods and services purchased
     (112 )     —               (112 )
Personnel costs
     (28 )     —               (28 )
Depreciation and amortization
     (56 )     (12 )(a)             (68 )
Other operating exp enses
     (121 )     —               (121 )
Financial expenses, net
     (9 )     —               (9 )
 
    
     
             
 
Results from ordinary business Activities
     (88 )     (12 )             (100 )
Taxes
     —       —               —  
 
    
     
             
 
Net loss
     (88 )     (12 )             (100 )
 
    
     
             
 

(a)   Under German GAAP, licenses amortization commences on the date the licenses are acquired. Under Dutch GAAP, amortization of these licenses would commence upon the licenses being placed into service. This adjustment records the amortization expense recognized under German GAAP not previously recognized under Dutch GAAP during the nonoperational period of the licenses.

Note 20

The table below presents the adjustments to convert BEN’s historical Dutch GAAP consolidated statement of operations for the year ended December 31, 2001 to Deutsche Telekom’s accounting policies under German GAAP. The BEN consolidated financial statements for the year ended December 31, 2001 are derived from the audited BEN consolidated financial statements provided in a Deutsche Telekom Current Report on Form 6-K dated May 23, 2002.

                                 
    For the Year ended December 31, 2001
   
                            BEN
                            As Reported
            German           Adjusted for
    Historical   GAAP           German
    BEN   Adjustments           GAAP
   
 
         
    Note 22                        
Net revenue
     448       —               448  
Total operating performance
     448       —               448  
 
    
     
             
 
Goods and services purchased
     (521 )     —               (521 )
Personnel costs
     (41 )     —               (41 )
Depreciation and amortization
     (75 )     (24 )(a)             (99 )
Financia l expenses, net
     (10 )     —               (10 )
 
    
     
             
 
Results from ordinary business
                                
Activities
     (199 )     (24 )             (223 )
 
    
     
             
 
Taxes
     —       —               —  
 
    
     
             
 
Net loss
     (199 )     (24 )             (223 )
 
    
     
             
 

 

Table of Contents

(a)   Under German GAAP, license amortization commences on the date the license is acquired. Under Dutch GAAP, amortization of these licenses would commence upon the asset being placed into service. This adjustment records the amortization expense recognized under German GAAP during the non-operational period of the license.

Note 21

The table below presents the adjustments to convert the historical VoiceStream U.S. GAAP and U.S. dollars consolidated statements of operations for the five month period ended May 31, 2001 to Deutsche Telekom’s accounting policies under German GAAP and euros. The VoiceStream consolidated financial statements for the five months ended May 31, 2001 are derived from the audited VoiceStream consolidated financial statements provided in a Deutsche Telekom Current Report on Form 6-K dated April 22, 2002.

                                         
    For the Five Months ended May 31, 2001
   
            German                
            GAAP           VoiceStream   VoiceStream
    VoiceStream   Adjustments           Pre-Acquisition   Pre-Acquisition
    US $   US $           US $   EUR
   
 
         
 
    Note 22   Note 23                   Note 24
Net revenue
     1,250       —               1,250       1,377  
Other owned capitalized costs
     72       (6 )(a)             63       70  
 
    
     
             
     
 
 
             (3 )(b)                        
Total operating performance
     1,322       (9 )             1,313       1,447  
Other operating income
     8       —               8       9  
Goods and services purchased
     (456 )     —               (456 )     (502 )
Personnel costs
     (284 )     —               (284 )     (313 )
Depreciation and amortization
     (559 )     (34 )(c)             (588 )     (648 )
 
             5  (d)                        
Other operating expenses
     (906 )     —               (906 )     (998 )
Financial expenses, net
     (258 )     5  (d)             (258 )     (285 )
 
             (17 )(e)                        
 
             12  (f)                        
 
    
     
             
     
 
Results from ordinary business activities
     (1,133 )     (38 )             (1,171 )     (1,290 )
Taxes
     (16 )     —               (16 )     (18 )
 
    
     
             
     
 
Loss after taxes
     (1,149 )     (38 )             (1,187 )     (1,308 )
Income applicable to minority
     (5 )     —               (5 )     (5 )
 
    
     
             
     
 
shareholders Net loss
     (1,154 )     (38 )             (1,192 )     (1,313 )
 
    
     
             
     
 

Note 22

Reclassifications have been made to the VoiceStream and BEN historical financial information presented under U.S. GAAP and Dutch GAAP, respectively, to conform to Deutsche Telekom’s presentation under German GAAP.

Note 23

Accounting principles generally accepted in Germany differ in certain material respects from those generally accepted in the U.S. The differences which are material to restating the historical consolidated or combined statement of operations of VoiceStream are disclosed in Note 21.

(a)  Under German GAAP, internal software development costs are not capitalized. This adjustment reverses the costs capitalized and related amortization costs for U.S. GAAP purposes.

(b)  For U.S. GAAP, costs such as leases are capitalized on cell sites not yet placed in service. For German GAAP, these costs are expensed.

(c)  Under German GAAP, license amortization commences on the date the license is acquired. Under U.S. GAAP, amortization of these licenses would commence upon the asset being placed into service. This adjustment records the amortization expense recognized under German GAAP during the non-operational period of the license.

(d)  Under German GAAP, financing costs are expensed as incurred. This adjustment reverses the amortization of financing costs previously expensed for German GAAP, which are expensed in the current period for U.S. GAAP purposes.

(e)  Under German GAAP, in terest is not capitalized related to the build out of licenses which are not yet placed in service. Under U.S. GAAP, interest costs are capitalized as part of the asset being constructed.

(f)  Under U.S. GAAP, certain derivative adjustments are recorded in other comprehensive income. For German GAAP, derivative adjustments are recorded against income. This adjustment records the adjustments to income for German GAAP purposes.

 

Table of Contents

Note 24

     VoiceStream presents its financial statements in U.S. dollars. Deutsche Telekom presents its financial statements in euros. The results as restated under German GAAP have been translated into euros at the following average rates:

                         
    $           EUR
   
         
5 months to May 31, 2001
     1.00     to     1.10207  

 

Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

     
    DEUTSCHE TELEKOM AG
     
     
    By: /s/ ppa. Rolf Ewenz-Sandten
   
    Name: Rolf Ewenz-Sandten
Title: Vice President

Date: April 11, 2003