185000000 IT Holding Finance SA

RISK FACTORS
We are dependent on our ability to negotiate, maintain and renew license agreements with the owners of leading
brands.
We produce apparel and accessories under brands that we either own or are licensed to us. Our portfolio of
licensed brands includes D&G Dolce & Gabbana, Versus, Versace Jeans Couture, Just Cavalli and C’N’C
Costume National. In 2004, we derived 66.0% of our consolidated net revenues and, we believe, approximately
77.9% of our consolidated EBITDA from sales of our licensed brands. The agreements governing these licenses
expire between 2006 and 2010. In particular, our D&G Dolce & Gabbana license expires upon completion of the
2006/2007 Fall-Winter season.
These agreements require us to make minimum guaranteed payments, achieve certain minimum turnover
thresholds, subject us to restrictive covenants and require us to provide certain design and other services to our
licensors. If we are unable to fulfil the conditions of these license agreements, they may be terminated by the
licensor. Moreover, each of our license agreements except one, may be terminated by the relevant licensor in the
event we cease to be controlled by our current controlling shareholder.
Our licenses are extremely important to us and we may not be able to negotiate extensions or renewals of our
license agreements on terms that are acceptable to us, or at all. The termination of, or failure to renew, one or more
of our licenses could have a material adverse effect on our business, financial condition and results of operations.
Moreover, even if we are able to renew our licenses when they expire, the future profitability of our licensed brands
could be impacted as licensors continue their efforts to assert greater control over license terms. See “Description
of Business—Licenses and Other Intellectual Property” for a summary of the terms and conditions of our principal
licenses.
The industry in which we operate is highly competitive, and we may not be able to continue to compete
effectively.
The industry in which we operate is highly competitive. We compete with many other designers and manufacturers
of luxury goods, some of whom are larger, more diversified and have greater financial and other resources than we
do. We compete on a variety of factors including brand image and recognition, the ability to anticipate and respond
to changing consumer demands, product quality, manufacturing expertise, marketing, advertising and price. Our
ability to remain competitive in these areas will be critical to our future success. Our inability to do so could have a
material adverse effect on our business, financial condition and results of operations.
Our success depends on the reputations of our brands.
The success of our business depends on the reputations of our owned and licensed luxury and young lines brands.
These reputations are influenced by factors such as the style and design of our products, the availability and quality
of the materials used in making them, the image of our brands and licensors, the quality of our advertising, public
relations and marketing campaigns, and our general corporate profile. Any decline in the reputations of our brands
could have a material adverse effect on our business, financial condition and results of operations.
Demand for our products is heavily influenced by general economic conditions.
The luxury goods industry is cyclical and heavily dependent on overall levels of disposable income and consumer
spending, which in turn tend to be affected by the cost of consumer borrowing and economic conditions generally.
Moreover, continued geopolitical turmoil, additional terrorist attacks or similar events could lead to declines in
consumer confidence and further affect our business, financial condition and results of operations.
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