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 The movement in temporary differences during the year was as follows: Movement in temporary differences during the year Balance Recognized Change Balance (In thousands of Euros) 01/01/2004 in income in cons. area 12/31/2004 Property, plant and equipment 1,456 (471) - 985 Intangible assets 43,640 (4,670) 3,259 42,229 Investment property 1,119 (183) - 936 Investment in subsidiary (14,315) 3,418 - (10,897) Interest-bearing loans and borrowings 1,056 585 (773) 868 Employee benefits 245 (150) (62) 33 Provisions (6,039) 1,210 (42) (4,871) Other items (1,855) (1,827) (301) (3,983) Tax value of loss carry-forwards recognized (7,006) 365 - (6,641) Net tax (assets)/liabilities 18,301 (1,723) 2,081 18,659 (20) Bank overdrafts and loans This note provides information about the contractual terms of the Group’s bank overdrafts and borrowings. For more information about the Group’s exposure to interest rate and foreign currency risk, see note 28 on Financial instruments. (In thousands of Euros) 12/31/2004 12/31/2003 Bank overdrafts and short term loans Current portion of bank loans 14,722 3,441 Bond issues 182,552 - Factoring 81,480 157,029 Current portion of finance lease liabilities 82 694 Bank facility 39,966 37,710 318,802 198,874 Long-term financial payables Bank loans 71,209 87,740 Bond issues 135,902 207,874 Finance lease liabilities - 483 207,111 296,097 Total 525,913 494,971 In the prior year financial statements bank overdrafts and short-term loans at December 31, 2003 amounted to Euro 212,520 thousand and long-term financial payables amounted to Euro 282,451 thousand. In the current year financial statements the 2003 amounts have been adjusted to reclassify Euro 13,646 thousand, relating to the “Ferré Finance 7% 05/05” notes, from short-term to long-term borrowings in order for the criteria used to divide the short-term portion and long-term portion of borrowings to be coherent with the year 2004. F- 33
IT HOLDING S.p.A. Notes to the consolidated financial statements for the year ended December 31, 2004 The terms and maturities of borrowings are as follows: Less More Less More than 1-2 2-5 than than 1-2 2-5 than 1 year years years 5 years 1 year years years 5 years (In thousands of Euros) Total 2004 2004 2004 2004 2004 Total 2003 2003 2003 2003 2003 Bank loans: Euro - variable at 4.6% 83,530 12,808 38,818 31,904 - - - - - - Euro - variable at 4.7% - - - - - 84,900 - 84,900 - - Euro - variable at 3.3% (2003: 3,2%) 1,249 1,249 - - - 3,734 2,542 1,192 - - others 1,152 665 487 - - 2,547 899 738 910 - Bond issues: eurobond 2005 - fixed 7% 182,552 182,552 - - - 207,874 - 207,874 - - senior notes due 2012 - fixed 9 7/8 % 135,902 - - - 135,902 - - - - - Factoring: without recourse - variable at 2.2% (2003: 2,1%) 76,152 76,152 - - - 157,029 157,029 - - - with recourse - variable at 3.7% 5,328 5,328 - - - - - - - - Finance lease liabilities 82 82 - - - 1,177 694 483 - - Bank facility: Ordinary current account 28,159 28,159 - - - 17,606 17,606 - - - Advances on export 7,279 7,279 - - - 14,908 14,908 - - - Bills withdrown falling due 3,222 3,222 - - - 2,789 2,789 - - - Advances on orders 1,306 1,306 - - - 2,407 2,407 - - - Total 525,913 318,802 39,305 31,904 135,902 F- 34 494,971 198,874 295,187 910 - Bank Loan of Euro 85 million: Bank loans includes a bank loan of Euro 85 million, granted in October 2004, by a pool of banks headed by Sanpaolo IMI S.p.A.. The principal amount is to be repaid in 9 equal semiannual installments commencing in October 2005 and terminating in October 2009. Interest accrues at a rate per annum equal to EURIBOR +2.4%. Voluntary prepayments are permitted in minimum installments of Euro 1 million, whereas prepayments are mandatory if certain circumstances arise, including with: • the net proceeds from the disposal of assets other than in the ordinary course of business or specific exceptions as defined in the Loan Agreement; • 100% of the net proceeds from the issuance of any debt or equity securities issuance (other than any debt securities issued in connection with the Senior notes due 2012); and • the net proceeds from the disposal of directly operated stores, including the agreement or termination of the relevant lease agreements. The Loan Agreement includes a number of undertakings and restrictive covenants typical for credit facilities of this nature, including: • a negative pledge; • restrictions on disposals of assets and mergers, acquisitions or spin-offs, unless permitted under the Loan Agreement; • no material adverse changes; • an obligation to redeem or repurchase the 2005 Notes. The Loan Agreement provides for a number of financial covenants typical for credit facilities of this nature, pursuant to which the Company has to meet certain conditions regarding debt-to-equity ratios, leverage ratios, and permitted levels of net financial debt and annual capital expenditures at all times during the term of the Loan Agreement. In order to secure claims under the Loan Agreement, upon the satisfaction and discharge of the 2005 Notes, the Company will grant share pledges over the share capital of ITTIERRE S.p.A., GIANFRANCO FERRÉ S.p.A. and MALO S.p.A. for the benefit of the lenders and the other secured parties (including the holders of the 2012 Senior Notes). Furthermore, the Loan Agreement provides that the following subsidiaries of the Company give guarantees for the benefit of the lenders under the Loan Agreement: • Ittierre S.p.A.; • MALO S.p.A.; and • ITC S.p.A.
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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
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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