185000000 IT Holding Finance SA

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IT HOLDING S.p.A. Notes to the consolidated financial statements for the year ended December 31, 2004 Deferred tax expense 2004 2003 (In thousands of Euros) Origination and reversal of temporary differences (2,088) (5,656) Benefit of tax losses recognised 365 (2,542) Subtotal (1,723) (8,198) Tax benefit on parent company's dividends - (25,866) Total (1,723) (34,064) Total income tax expense in income statement 13,809 (21,729) Tax benefit on parent Company’s dividends in the year 2003, represents the receivable that IT HOLDING, which was in a tax loss position, earned versus tax authorities on the dividends received during the year 2003 from Ittierre S.p.A.. The details and movements of deferred tax assets and liabilities are described in note 19, Deferred tax assets and liabilities. The reconciliation between the actual and theoretical tax rates for 2003 and 2004 is as follows: (In thousands of Euros) 2004 2003 Income (loss) before tax 2,575 (84,772) Income tax using the domestic corporation tax rate 33.00% 850 33.00% (27,975) Temporary differences unrecognised (2,841) (5,287) Benefit of tax losses unrecognised (12,760) 14,489 IRAP 6,298 5,424 Foreign company 902 950 Permanent differences 19,031 15,889 Current tax prior years 1,392 - Tax benefit on dividends - (25,866) Others 937 647 Total income tax expenses in income statement 13,809 (21,729) (9) Significant Events after the Year-end On January 11, 2005, IT HOLDING Finance S.A., a wholly-owned subsidiary, concluded the voluntary partial tender offer made on December 13, 2004 for the repurchase of 80% of the “Euro 200 million 7% Guaranteed notes due 2005” of which Euro 175 million were still outstanding at the offer date. Following the tender offer, the Group repurchased notes for a nominal value of Euro 80,434 thousand and total consideration of Euro 84,878 thousand. The notes were repurchased with part of the proceeds arising from the senior notes due 2012 issued October 2004 held in an escrow account (see note 11). The loss realized upon repurchase of the notes, amounting to Euro 603 thousand was accrued for at December 31, 2004 and is included in the income statement caption “financial income (charges)” (see note 6). On March 4, 2005 IT HOLDING Finance S.A. placed an additional Euro 35 million of senior notes due 2012 at an issue price of 100.5% to be treated as a single class with the 2012 senior notes issued in October 2004. The net proceeds will be used, together with the remaining proceeds from the October 2004 issue, to fund the repurchase of the remaining outstanding “Euro 200 million 7% Guaranteed notes due 2005”. On March 17, 2005, the Board of Directors called an extraordinary shareholders’ meeting to be held on April 20, 2005 (April 22, on second call) to grant the Board the power to increase the share capital on one or more occasions, through payment and with a share premium, with the exclusion of the option in accordance with paragraph 5 of article 2441 of the Italian Civil Code, for a maximum nominal amount of Euro 8 million and a total counter-value not to exceed Euro 100 million, as well as to change article 5 of the Company’s bylaws accordingly. Management intends to execute the faculty to increase the share capital, at least partially, by December 31, 2005. F- 27
IT HOLDING S.p.A. Notes to the consolidated financial statements for the year ended December 31, 2004 (10) Cash and Cash Equivalents This caption, comprising bank and P.O. deposits, equal to the face value of current accounts with positive balances held with banks, including interest accrued at year end. (In thousands of Euros) 12/31/2004 12/31/2003 Bank and P.O. deposits 14,194 35,670 Cheques on hand 224 200 Cash on hand 345 900 Total 14,763 36,770 Cash on hand reflects the face value of petty cash at the balance sheet date. (11) Short-term financial assets (In thousands of Euros) 12/31/2004 12/31/2003 Escrow account 148,637 - Junior notes 38,128 30,699 Other 27 26 Total 186,792 30,725 The escrow account, deposited with the Luxembourg branch of the Sanpaolo IMI S.p.A. bank, was set up to deposit the net proceeds of the Euro 150 million 9 7/8% Senior Notes due 2012, issued in October 2004 (see note 20). Its use is restricted to the repurchase of the “Ferré Finance 7% 05/05” bond repayable on May 10, 2005. Euro 80,434 thousand were used in January 2005 for the voluntary partial tender offer made for the repurchase of 80% of the Ferré bond. (see note 9). The carrying values of the junior notes and escrow account are estimated to be equivalent to their fair values. The junior notes have a 1 month duration and accrue interest at an effective interest rate of 2.18% (2003: 2.14%). The escrow account is restricted until May 10, 2005 and accrues interest at an effective interest rate of 2.04%. For the purposes of the cash flow statement, cash flows related to the escrow account have been included in financing activities, whereas cash flows related to junior notes and other short-term financial assets have been included in investing activities. (12) Trade receivables, net The fair value of trade receivables is estimated by the directors to approximate their carrying value. (In thousands of Euros) 12/31/2004 12/31/2003 Trade receivables 178,740 178,252 Trade receivables from associated companies 7,515 - Trade bills receivable 47,856 61,910 Less: Provision for impairment of trade receivables (7,471) (8,388) Total 226,640 F- 28 231,774 The provision for impairment of trade receivables has been estimated using analytical criteria on the basis of available data and in general on the basis of historical trends. During the year ended December 31, 2004, the Group recognized an impairment loss of euro 3,876 thousand (2003: euro 3,778 thousand) on its trade receivables in the income statement. Certain Group subsidiaries have adhered to the securitization programme described in the significant accounting
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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
Page 33 and 34: We maintain a close working relatio
Page 35 and 36: Licensor and Brands Gianni Versace
Page 37 and 38: Legal proceedings Ordinary Course L
Page 39 and 40: OPERATING AND FINANCIAL REVIEW AND
Page 41 and 42: each year, when payments to our sup
Page 43 and 44: Income taxes In 2004, we incurred a
Page 45 and 46: Facilities and bank overdraft facil
Page 47 and 48: • €150.0 million principal amou
Page 49 and 50: Contractual obligations The followi
Page 51 and 52: An impairment loss in respect of go
Page 53 and 54: Salvatore Vicari has been a directo
Page 55 and 56: PRINCIPAL SHAREHOLDERS The table be
Page 57 and 58: invoiced to us by Pavia e Ansaldo -
Page 59 and 60: The Board of Directors IT Holding S
Page 61 and 62: REPORT OF THE AUDITORS The Board of
Page 63 and 64: IT HOLDING S.p.A. CONSOLIDATED BALA
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Page 67 and 68: 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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