185000000 IT Holding Finance SA

We must anticipate trends and respond to changing consumer preferences.
Our success depends in large part on our ability and that of our licensing partners to originate and define fashion
trends, as well as to anticipate and react to changing consumer preferences. Our products must appeal to a broad
range of consumers whose preferences cannot be predicted with certainty and are subject to rapid change. We
cannot assure you that we will be able to continue developing appealing products or meet constantly changing
consumer preferences, nor can we ever be certain that our new products will be successfully received by our
customers and by consumers. If we fail to anticipate, identify or promptly react to changing consumer demands
and fashion trends, our brand images may be impaired, which could have a material adverse effect on our business,
financial condition and results of operations.
We are dependent on our brand trademarks and other intellectual property rights.
We believe that our brand trademarks and other intellectual property rights are critical to our ability to create and
sustain demand for our products. We devote substantial resources to the establishment and protection of these
rights on a worldwide basis and believe that these efforts have led to successful registration of our brand
trademarks in our principal markets. Nevertheless, we cannot assure you that the actions taken by us or our
licensors to establish and protect our brand trademarks and other intellectual property rights will be adequate to
prevent imitation of our products by our competitors or other third-parties or to prevent these persons from
asserting rights in, or ownership of, our brand trademarks and other intellectual property rights.
We require significant working capital and may not have sufficient operating cash flow or access to capital to
manage our business effectively.
Pursuant to our business model, we produce items based on product orders received in advance of sales to our
customers. We therefore require significant working capital to operate our business. Although we believe that our
expected cash flows from operations together with available borrowings will be adequate to meet our anticipated
working capital, general liquidity and debt service needs, we cannot assure you that our business will generate
sufficient cash flows from operations to meet these needs or that future debt or equity financing will be available to
us in an amount sufficient to enable us to fund our working capital or other liquidity requirements. As of
December 31, 2004, we believe we would have been able to borrow approximately €90.1 million under our
Uncommitted Bilateral Loan Facilities. These Uncommitted Bilateral Loan Facilities are uncommitted and
short-term in nature and are subject to termination or withdrawal by our bilateral lenders at any time. Any such
termination or withdrawal could lead to or exacerbate liquidity problems. We also rely on a securitization program
for our liquidity needs. As of December 31, 2004, approximately €73.8 million was available under our
securitization program. If our working capital requirements exceed our projections, or if our operating cash flow is
lower than expected, we may be required to seek additional financing, which may not be available on commercially
reasonable terms, if at all.
Our ability to arrange financing generally and our cost of capital depends on numerous factors, including general
economic conditions, the availability of credit from banks, other financial institutions and in the capital markets,
restrictions in instruments governing our indebtedness and our general financial performance. Our liquidity
problems would be exacerbated to the extent that our suppliers and third-party manufacturers were to be successful
in negotiating a shortening of the payment terms we offer to them (which currently range between two and five
months, on average). Our working capital position would be negatively impacted to the extent that our suppliers
and third party manufacturers were to be able to negotiate a shortening of these payment terms. Our inability to
fund our working capital requirements could adversely affect our ability to provide our customers and suppliers
with payment terms that are acceptable to them or to maintain the inventory levels that are necessary to effectively
manage our business. See “Operating and Financial Review and Prospects”.
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