185000000 IT Holding Finance SA

(3) Net working capital is defined as the sum of trade receivables, inventories, other current assets, deferred tax assets and
other non-current assets less the sum of trade payables and accrued expenses, tax liabilities and income tax payable, other
current liabilities, deferred tax liabilities and other long-term liabilities.
(4) Net debt represents the sum of our bank overdrafts and short-term loans and our long-term financial payables less cash and
cash equivalents and short-term financial assets.
(5) Acquisitions do not include our acquisition of the Gianfranco Ferré Group.
(6) Investments in collection development are amounts invested to develop prototypes and samples of items comprising our
collections. The investment capitalized includes the costs of materials and direct labor. These amounts are typically fully
amortized within twelve months of the time of investment.
(7) We define EBITDA as earnings before interest, income taxes, depreciation and amortization. EBITDA is presented
because we believe that it is commonly reported and widely used by securities analysts, investors and other interested
parties in the evaluation of companies in our industry. However, other companies in our industry may calculate EBITDA
differently than we do. EBITDA is not a measurement of financial performance under IFRS and should not be considered
as an alternative to other indicators of our operating performance, cash flows or any other measurement of performance
derived in accordance with IFRS.
(8) We calculate Adjusted EBITDA by adding to and subtracting from EBITDA certain non-recurring or unusual items that are
included in our EBITDA. We believe that Adjusted EBITDA allows for a comparison of our performance on a consistent
basis without regard to factors that we believe do not reflect the regular operating performance of our business. Accordingly,
we have included this information in this annual report to permit a more complete and comprehensive analysis of our
operating performance relative to other companies. The following table shows the adjustments we have made to derive
Adjusted EBITDA:
Year Ended
December 31, 2004
(unaudited)
(€ in millions)
EBITDA ................................................................................................................................ €106.0
Adjustments:
Discontinued businessesf(a) ................................................................................................ 9.8
Redundancy costs(b)................................................................................................................................ 1.3
Restructuring costs(c) ................................................................................................................................ 8.1
Eyewear business disposal(d)................................................................................................ (1.0)
Adjusted EBITDA ................................................................................................................................ €124.2
(a) Adjustments made in respect of discontinued businesses include the following:
• The elimination of €3.5 million relating to the disposal of our fragrance business, consisting of costs related to
our ongoing obligation to promote Ferré brand fragrances;
• The elimination of the €5.9 million one-time loss resulting from the sale of Gigli S.p.A. recorded in the twelve
month period ended December 31, 2004;
• The adding back of €0.4 million to adjust for the net impact of charges incurred by our Gentryportofino business
during the twelve-month period ended December 31, 2004.
(b) Represents redundancy costs across various businesses, including costs of €0.6 million relating to the potential
claims of a terminated manager of IT USA, €0.2 million relating to the termination of certain senior managers of the
Ferré Group, and €0.5 million in costs relating to redundancies of managers and other employees of MALO S.p.A
and ITC S.p.A.
(c) Represents restructuring costs of €8.1 million mainly related to our Ferré and Malo businesses, consisting of facility
shutdowns and certain contract termination penalties.
(d) Represents the EBITDA generated by this business in the twelve months ended December 31, 2004.
11