185000000 IT Holding Finance SA

IT HOLDING S.p.A. Notes to the consolidated financial statements for the year ended December 31, 2004
Interest hedging contracts that qualify as cash flow hedges are composed of interest rate swaps for a nominal
amount of Euro 30,000 thousand that mature within 2 years and have fixed swap rates ranging from 2.77% to
3.16% and an interest rate swap for a nominal amount of Euro 10,000 thousand that matures in November 2007 at a
variable interest rate that is floored and capped within the following ranges: 1 st year 2.15%-3.63%, 2 nd year 2.5%-
3.63%, 3 rd year 2.75%-3.63%. These interest rate swaps have been designated to hedge the cash flow interest rate
risk arising on the five year syndicated loan of Euro 85 million maturing interest at Euribor plus 240 basis points.
Forward exchange contracts, currency options and FX swaps are entered into to off-set foreign exchange exposure.
Hedge accounting is not applied as these derivative contracts do not qualify as fair value or cash flow hedges.
Changes in fair value are therefore recognized in the income statement in the caption “financial income (charges)”
as net foreign exchange gains or losses.
On November 10, 2003 FERRÉ FINANCE S.A. entered in a loan for an original amount of YEN 22,103,200,000
with the parent company IT HOLDING S.p.A.. The companies entered into two currency interest swaps (put and
call) with external parties to hedge the foreign currency and interest rate risk on their exposure in Japanese Yen.
The nominal value of the swaps in being at December 31, 2004 was Euro 165 million (2003: Euro 188.5 million).
Effective interest rate and repricing analysis
In respect of interest-earning financial assets and interest bearing financial liabilities, the following table indicates
their effective interest rate at the balance sheet date and the periods in which they reprice or mature.
Effective 6 More Effective 6 More
interest months 6-12 1-2 2-5 than interest months 6-12 1-2 2-5 than
rate Total or less months years years 5 years rate Total or less months years years 5 years
(In thousands of Euros) 2004 2004 2004 2004 2004 2004 2004 2003 2003 2003 2003 2003 2003 2003
Cash and cash equivalents 14,763 14,763 - - - - 36,770 36,770 - - - -
Escrow account 2.04% 148,637 148,637 - - - - - - - - - -
Junior notes 2.18% 38,128 38,128 - - - - 2.14% 30,699 30,699 - - - -
Bank loans:
Euro floating rate loan 5.76% (83,530) (83,530) - - - - - - - - - -
effect of interest rate swap (2.77%) - 40,000 (40,000) - - - - - - - -
Euro floating rate loan - - - - - - 4.68% (84,900) (84,900) - - - -
effect of interest rate swap - - - - - - (3.07%) - 50,000 - (20,000) (30,000) -
Euro floating rate loan 3.96% (1,249) (1,249) - - - - 4.68% (3,734) (3,734) - - - -
Euro floating rate loan 3.45% (958) (958) - - - - 3.50% (1,413) (1,413) - - - -
Euro fixed rate loan 2.58% (194) (194) - - - - 2.58% (579) (193) (193) (193) - -
Euro floating rate loan - - - - - - 3.22% (555) (555) - - - -
Bond issues:
Eurobond 2005* 7.39% (182,552) (182,552) - - - - 7.39% (207,874) - - (207,874) - -
senior notes due 2012* 12.46% (135,902) - - - - (135,902) - - - - - -
Factoring:
Euro floating rate liabilities 2.18% (76,152) (76,152) - - - - 2.14% (157,029) (157,029) - - - -
Euro floating rate liabilities 3.71% (5,328) (5,328) - - - - - - - - - -
Finance lease liabilities:
Euro floating rate liabilities (82) (82) - - - - (1,177) (1,177) - - - -
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 (324,385) (148,483) 0 (40,000) 0 (135,902) (427,502) (169,242) (193) (228,067) (30,000) 0
* These liabilities bear interest at a fixed rate.
F- 41