185000000 IT Holding Finance SA

IT HOLDING S.p.A. Notes to the consolidated financial statements for the year ended December 31, 2003
25. Other long-term liabilities
Other long-term liabilities at December 31, 2003 and 2002 are made up as follows:
12/31/2003 12/31/2002 Increase
(In thousands of Euros)
(decrease)
Agents' termination benefits
Others
4,914
4,100
814
- Provision for return on sales 3,002
3,190
(188)
-Provision for tax contingencies 3,419
3,251
168
- Provision for other contingencies 2,980
4,207
(1,227)
Total 14,315
Agents’ termination benefits are calculated on the basis of the charge to be paid on the termination of agency contracts
in compliance with law and other relevant factors such as historical data, the average duration of agents’ contracts and
their turnover.
The amount of the Agents’ termination benefits has been determined based on the present value of the expenditures
expected to be required to settle the obligation.
Other mainly includes:
• €3,002 thousand (2002: €3,190 thousand) in relation to the provision for returns on sales, set up to cover the
unrealized profit arising from the difference between the sales value of possible returns to be received after year
end, but pertaining to the year, and their estimated recovery value.
• Estimated costs of €2,980 thousand arising from litigation mainly relating to the Ferré Group, as follows: —
Lawsuit brought against GIANFRANCO FERRÉ S.p.A. by Tecnostile S.r.l. of Firenze, claiming damages of
approximately Euro 620 thousand for pre-contractual liability. The judge is currently gathering evidence. —
GIANFRANCO FERRÉ S.p.A. learned of a request put forth by the receivers of the Redaelli bankruptcy for
reimbursement of payments made by Redaelli S.p.A. between March 1998 and March 1999. To date, a lawsuit
has not yet been brought against the company and, on the basis of the legal advisors’ opinion, it is not probable
that the company will lose the case. — At the end of 2003, GIANFRANCO FERRÉ S.p.A. reached an out-ofcourt
settlement with the receivers of Gruppo Nadini S.p.A., settling the litigation pending at December 31, 2002.
— A lawsuit brought against GIANFRANCO FERRÉ S.p.A. by Mr. Roland Bohler (former CEO of the
company), claiming that he had been dismissed without just cause. On November 2, 2002, the company appeared
in Court challenging all Mr. Bohler’s inferences and claims. The provision at December 31, 2003 reflects the
maximum potential risk on the basis of updated estimates, considering the opinions of the company’s external
advisors. — €3,419 thousands (2002: €3,251 thousand) refers to contingent tax liabilities of the following
companies related to disputes currently pending with tax authorities.
M.A.C.—Manifatture Associate Cashmere S.p.A.
The tax dispute that arose with regard to 1989, for which the Firenze Tax Commission issued sentence no. 107/17/02
of November 23, 2002, lodged on January 15, 2003, was definitively settled pursuant to article 16 of Law
no. 289/2002.
The preliminary assessment report served in 1998 relating to 1995, 1996, and 1997, alleging this company’s
realization of a higher taxable base for direct tax purposes, and mainly focusing the tax recovery on the transfer
pricing applied to foreign Group companies, was followed by notices of assessment for 1995 and 1996. The company
has appealed with the relevant judicial authorities.
In 2001, a preliminary assessment report was served for 1998, 1999, and 2000, relating to the same irregularities
found in previous years. No notices of assessment have been issued to date.
The acquisition contract for M.A.C.—Manifatture Associate Cashmere S.p.A. (formerly FINCASHMERE S.p.A.)
and subsequent integrations provides that the sellers are liable for tax contingencies pertaining to years up to 1998 and
for a maximum amount of Euro 4,390 thousand, with an excess clause of Euro 2,324 thousand. On October 30, 2003,
an agreement was signed with the sellers on the basis of which they terminate the above guarantee and pay M.A.C.—
F- 75
14,748
(433)