185000000 IT Holding Finance SA

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<strong>IT</strong> HOLDING S.p.A. Notes to the consolidated financial statements for the year ended December 31, 2002 23. Other current liabilities Other current liabilities at December 31, 2002 and 2001 can be analyzed as follows: December 31, 2002 2001 Increase (decrease) (In thousands of Euros) Due to factors................................................................................................................ 12,901 8,569 4,332 Due to social security agencies..................................................................................... 2,858 2,520 338 Remuneration to be paid............................................................................................... 5,962 5,141 821 Remuneration to the Board of Directors ...................................................................... 896 513 383 Remuneration to the Board of Statutory Auditors ....................................................... 305 220 85 Other parties.................................................................................................................. 7,450 7,066 384 Other current liabilities and accrued expenses............................................................. 50,612 20,642 29,970 Total.............................................................................................................................. 80,984 44,671 36,313 Payables to factors relate to the amount due to the factoring companies to which Group suppliers have sold their receivables due from the Group. Remuneration to be paid includes, inter alia, accruals by employees but not yet paid at year end. Other parties mainly comprises credit notes to be issued, payables for year-end achievement awards to customers, and amounts due for charges incurred to recover the full availability of the Romeo Gigli brand in the perfume division. Other current liabilities are comprised mainly of negative market values in financial derivatives totaling €21,856 thousand (2001: €37 thousand) and accrued royalties in the amount of €11,085 thousand (2001: €7,722 thousand). 24. Employee benefits: pension liabilities and severance indemnities Pension liabilities and severance indemnities at December 31, 2002 and 2001 mainly relate to Italian staff leaving indemnity (so called TFR), which is paid to all employees on termination of their employment. Each year the Group accrues for each employee an amount partly based on the employee’s remuneration and partly based on the revaluation of the amounts previously accrued. The indemnity is an unfunded but fully provided liability. The liability is based on an actuarial valuation based on the assessment of the relevant parameters, which were as follows: Liability for defined benefit obligations 2002 2001 Principal actuarial assumptions at the balance sheet date Projected future remuneration increases ............................................................................... 2% 2% Projected future employee turnover ...................................................................................... 7.1-18.2% 7.7-17.2% The discount rate used is the swap rate curve. Movements in the net liability 2002 2001 (In thousands of Euros) Net liability at January 1............................................................................................................. 11,283 9,076 Accruals .................................................................................................................................................. 4,015 3,884 Utilizations.............................................................................................................................................. (2,592) (2,436) Other movements (changes in the consolidation area) .......................................................................... 897 759 Net liability at December 31 ................................................................................................................ 13,603 11,283 F- 121
<strong>IT</strong> HOLDING S.p.A. Notes to the consolidated financial statements for the year ended December 31, 2002 25. Other long-term liabilities Other long-term liabilities at December 31 2002 and 2001 are made up as follows: December 31, 2002 2001 Increase (decrease) (In thousands of Euros) Agents’ termination benefits .......................................................................................... Others 4,100 3,007 1,093 —Provision for return on sales....................................................................................... 3,190 3,476 (286) —Provision for tax contingences ................................................................................... 3,251 2,953 298 —Provision for other contingences................................................................................ 4,207 476 3,731 Total................................................................................................................................ 14,748 9,912 4,836 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 Agent’s termination benefits has been determined based on the present value of the expenditures expected to be required to settle the obligation. Other mainly includes: • €3,190 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 €4,207 thousand principally 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 would lose any such case. — At the end of 2003, GIANFRANCO FERRÉ S.p.A. reached an out-of-court 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. Ronald Bohler (former CEO of the company), claiming that he had been dismissed without cause. On November 2, 2002, the company appeared in Court challenging all Mr. Bohler’s inferences and claims. The provision at December 31, 2002 reflects the maximum potential risk on the basis of updated estimates, considering the opinions of the company’’s external advisors. • In 2002 the remaining amount of €3.251 thousands (2001: € 2.953) in liabilities relates to the tax provision that reflects estimated contingent tax liabilities which the following Group companies may have to pay following the tax disputes currently pending with the 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. F- 122
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CONFIDENTIAL Rule 144A Global Note
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Definitions In this annual report:
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• risks related to our principal
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Our Strategic Refocusing Program Du
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manufacturing of our products to th
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income tax on a consolidated basis
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(3) Net working capital is defined
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We must anticipate trends and respo
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We are subject to significant restr
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event of a foreclosure on the secur
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• avoid or invalidate all or a po
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a maximum of two years); (ii) a pro
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• pursuant to article 445 of the
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Our Company DESCRIPTION OF BUSINESS
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Versus is a medium-priced fashion b
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in print (fashion magazines and new
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We maintain a close working relatio
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Licensor and Brands Gianni Versace
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Legal proceedings Ordinary Course L
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OPERATING AND FINANCIAL REVIEW AND
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each year, when payments to our sup
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Income taxes In 2004, we incurred a
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Facilities and bank overdraft facil
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• €150.0 million principal amou
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Contractual obligations The followi
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An impairment loss in respect of go
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Salvatore Vicari has been a directo
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PRINCIPAL SHAREHOLDERS The table be
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invoiced to us by Pavia e Ansaldo -
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The Board of Directors IT Holding S
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REPORT OF THE AUDITORS The Board of
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IT HOLDING S.p.A. CONSOLIDATED BALA
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Acquisition of Subsidiary During 20
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IT HOLDING S.P.A. NOTES TO THE CONS
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IT HOLDING S.p.A. Notes to the cons
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185000000 IT Holding Finance SA

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