185000000 IT Holding Finance SA

IT HOLDING S.p.A. Notes to the consolidated financial statements for the year ended December 31, 2003
Geographical segments
Italy Europe Americas
2003
Far East and Rest of the Other
(In thousands of Euros)
Net revenues 281,865 230,749 77,838
Japan
45,831
world
20,630
operations
12,925
Segment assets 952,192
Capital expenditure and acquisitions 13,375
109,932
4,571
F- 62
56,430
731
12,589
279
1,681
-
(77,888)
Italy Europe Americas
2002
Far East and Rest of the Other
(In thousands of Euros)
Net revenues 265,613 223,508 83,591
Japan
51,852
world
21,407
operations
13,843
Segment assets 944,113
Capital expenditure and acquisitions 214,154
98,400
6,061
55,381
7,279
15,692
477
2,910
-
-
(94,257)
-
Total
669,838
1,054,936
18,956
Total
659,814
1,022,239
227,971
Apparel and accessories division
Net revenues rose by 0.4% to Euro 579,209 thousand, confirming this division as the Group’s main source of
revenues. As a percentage of total revenues, this division showed substantial stability from 2002 to 2003.
The cost of materials, slightly decreased in percentage of value of production (given by net revenues and change in
inventory) from 26.9% in 2002 to 26% in 2003.
The outside services increased by Euro 28,369 thousand to Euro 257,140 thousand mainly following the growth in
advertising and commercial expenses to support the "Ferré" brands, the increase in royalty expense as per contracts
with brand licensors, and the rise in outsourcing and a result of the internalization of the secondary Gianfranco Ferré
apparel collections.
The decrease in operating result of Euro 72,016 thousand is driven by the trend of costs described above and the
increase in depreciation and amortization due to the extraordinary write-downs, mainly of goodwill and trademark, of
Euro 54,367 thousand these extraordinary write-downs have been in line with Group accounting policies, these
write-downs were necessary following the decision to discontinue development of Romeo Gigli brand business and
the recognition that the current market prospects did not ensure the recovery of the book value of goodwill arising on
consolidation.
Eyewear division
The performance of this division reflected the effects of the market slowdown in the sector and, specifically, the
effects of the significant reduction of around Euro 7 million in sales to Nike on the previous year. However, the sharp
turnaround in the fourth quarter of 2003 offset the slowdown that led to a reduction in the Allison Group’s 2003
revenues. Net revenues dropped by 4.7% to Euro 57,266 thousand, versus Euro 60,087 thousand in 2002.
2003 eyewear figures broken down by geographical area show this division’s strong performance in Europe, with
growth of 22.3% and net revenues of Euro 15,990 thousand, versus Euro 13,073 thousand in 2002, following the
consolidation of the sales network. The EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND
AMORTIZATION was negative, mainly as a result of the costs relating to the new offices in Padova, the increase in
the sales force, and the advertising costs incurred to launch the Gianfranco Ferré, GF Ferré, Vivienne Westwood, Les
Copains, and John Richmond collections.
Similarly to the write-down recorded at consolidated level, goodwill arising on consolidation was written down by
Euro 2,074 thousand, and moulds were written down by Euro 85 thousand.
Perfume division
This division is headed by ITF S.p.A., the IT HOLDING Group’s vehicle for the development of the perfumes sector.
ITF S.p.A. licenses many brands, including, but not limited to, Romeo Gigli and Gianfranco Ferré (Group owned) and