2004 Annual Report - Benetton Group

Benetton Group Annual Report 2004

Benetton Group S.p.A.
Villa Minelli
Benetton Group Annual Report 2004
Ponzano Veneto [Treviso] - Italy
Share Capital: Euro 236,026,454.30 fully paid
Tax ID/Treviso Company register: 00193320264

I N D E X
2
The Benetton Group
11 Directors’ report
5 Directors and other officers
7 Letter to Shareholders from the Chairman and Founder
of the Benetton Group, Luciano Benetton
8 Financial highlights
Markets, trademarks and licenses
12 Production organization
14 Human resources
Information Technology
15 Accounting, tax and corporate organization
Investor Relations
16 Communications
17 Corporate Governance
25 Supplementary information
Benetton shares and shareholdings
27 Performance of Benetton shares
29 Relationships between the parent company,
its subsidiaries and other related parties
Management of financial risks
30 Privacy and the protection of personal data
31 Directors
Principal organizational and corporate changes
32 Significant events since year-end
Outlook for 2005
33 Group consolidated results
Consolidated statement of income
35 Performance by activity
37 Financial situation - highlights

47 Consolidated financial statements
42 Impact of introducing IAS/IFRS
Development of the relative regulatory framework
IAS/IFRS conversion process for the Benetton Group
48 Consolidated balance sheet reclassified according
to financial criteria
50 Consolidated statement of income with revenues
and cost of sales reclassified
52 Consolidated balance sheet – Assets
54 Consolidated balance sheet – Liabilities, Shareholders’
equity and Memorandum accounts
56 Consolidated statement of income
58 Statement of changes in Shareholders’ equity
59 Statement of changes in minority interests
60 Consolidated statement of cash flow
62 Companies and groups included in the consolidation
as of December 31, 2004
65 Notes to the consolidated financial statements
100 Auditors’ report
Activities of the Group
Form and content of the consolidated financial statements
66 Principles of consolidation
67 Accounting principles and valuation criteria
70 Supplementary information
73 Comments on principal asset items
82 Comments on principal liability and equity items
90 Memorandum accounts
91 Comments on principal items in the statement of income
101 Glossary
107 2005 financial calendar
I N D E X
3

Main consolidated companies as of December 31, 2004
Benetton Group SpA
Ponzano Veneto [Tv]
100%0%
Benind SpA
Ponzano Veneto [Tv]
100%
Olimpias SpA
Ponzano Veneto [Tv]
100%
SIGI Srl
Ponzano Veneto [Tv]
100%
Fabrica SpA
Ponzano Veneto [Tv]
100%
Benetton International SA
Luxembourg
100%
Benetton International
Property NV SA, Amsterdam
100%
Benetton Deutschland GmbH
München
100%
Benetton Holding International
NV SA, Amsterdam
100%
Benetton Retail Italia Srl
Ponzano Veneto [Tv]
50%
Filatura di Vittorio Veneto SpA
Vittorio Veneto [Tv]
100%
Buenos Aires 2000 Srl
Ponzano Veneto [Tv]
100%
Colors Magazine Srl
Ponzano Veneto [Tv]
3%
Benetton Real Estate Austria
GmbH, Wien
100%
Benetton 2 Retail Comércio
de Produtos Têxteis SA, Maia
[Portugal]
100%
Benetton Realty Spain SL
Barcelona
100%
Benetton Real Estate
International SA, Luxembourg
100%
Benetton USA Corp.
Wilmington
100%
Benetton Argentina SA
Buenos Aires
100%
Benetton Ungheria Kft
Nagykallo
100%
Benetton Manufacturing
Holding NV, Amsterdam
100%
Benetton Japan Co Ltd
Tokyo
100%
Benetton Finance SA
Luxembourg
100%
Benetton Tunisia Sàrl
Sahline
100%
Bentec SpA
Ponzano Veneto [Tv]
100%
Benair SpA
Ponzano Veneto [Tv]
100%
Benetton Retail Ungheria Kft
Nagykallo
100%
Benetton Retail Spain SL
Barcelona
100%
Benetton Real Estate Spain SL
Barcelona
97%
Benetton Real Estate Austria
GmbH, Wien
100%
Benetton Realty Portugal
Imobiliaria SA, Maia [Portugal]
100%
Benetton Australia Pty Ltd
Sydney
100%
Benetton Austria GmbH
Salzburg
100%
Bencom Srl
Ponzano Veneto [Tv]
100%
Benetton Retail Deutschland
GmbH, München
100%
Benetton France Sàrl
Paris
100%
DCM Benetton India Ltd
New Delhi
100%
100%
United Colors Communication SA Benetton Trading USA Inc
Lugano
Lawrenceville
100%
Benetton Croatia doo
Osijek
100%
Benetton Slovakia sro
Dolny Kubin
50%
Benetton Korea Inc
Seoul
100%
Benetton Società di Servizi SA
Lugano
100%
Benetton Trading Sàrl
Sahline
100%
Benetton Retail [1988] Ltd
London
100%
Benetton Real Estate
Belgique SA, Bruxelles
100%
Benetton Realty France SA
Paris
100%
Benetton Têxtil - Confecção
de Têxteis SA, Maia [Portugal]
100%
Benetton Manufacturing
Tunisia Sàrl, Sahline
100%
Benetton Retailing Japan Co Ltd
Tokyo
100%
Lairb Property Ltd
Dublin
100%
Denware Ltd
London
51%
New Ben GmbH
Frankfurt am Main
100%
Benetton Realty Russia OOO
Moscow
100%
Benetton Asia Pacific Ltd
Hong Kong
100%
United Colors of Benetton
Do Brasil Ltda, Curitiba

Board of Directors
Board of Statutory Auditors
Independent Auditors
Directors and other officers
Luciano Benetton [1] Chairman
Carlo Benetton Deputy Chairman
Silvano Cassano [2] Managing Director
Giuliana Benetton Directors
Gilberto Benetton
Alessandro Benetton
Reginald Bartholomew
Luigi Arturo Bianchi
Sergio De Simoi
Gianni Mion
Ulrich Weiss
Pierluigi Bortolussi Secretary to the Board
Angelo Casò Chairman
Filippo Duodo Auditors
Dino Sesani
Antonio Cortellazzo Alternate Auditors
Marco Leotta
PricewaterhouseCoopers S.p.A.
Powers granted
[1] Company representation and power to carry out
any action that is consistent with the Company’s
purposes, except for those expressly reserved
by law to the Board of Directors and to the
Shareholders’ Meeting, with limitation on some
categories of action.
[2] Power to carry out any action relating to the
ordinary administration of the Company as well
as certain acts of extraordinary administration
subject to limits on values.
D I R EC TO R S A N D OTH E R O F F I C E R S
5

Letter to Shareholders from the Chairman and Founder of the Benetton Group,
Luciano Benetton
Dear Shareholders,
2004 closes with the distribution of dividends totaling 50% of net income [which was higher
than forecasted], demonstrating the policy of the Benetton Group to create value for the
shareholders and the market.
During the year, we confirmed our talent for exporting, making 50% of total sales abroad. Having
always adopted the practice of thinking and planning with a long-term entrepreneurial mentality,
we intend to stay ahead of the competition, concentrating on emerging markets like China and
India, where we are already among the principal western players in the clothing sector. In the
Chinese market, we distribute our products; and India, where we produce and distribute, is our
bridgehead to entry into other Asian countries.
In fact, we are convinced that being entrepreneurs means believing in the future and in our abilities,
taking advantage of difficult times in the market to become more competitive. And to invest more in
the distribution network as well as in pricing policies that are more attractive to the customer.
In 2005, in particular, we intend to increase our commitment, earmarking resources of more than
200 million euro for development: with investments directed at restyling stores and new openings,
as well as at the product, in order to achieve an even more excellent quality-price ratio, and at style
and service to the network.
These are important commitments that we take on with conviction and optimism because we
believe in our network distribution model – a widespread presence in the world, in large capitals
as well as in smaller towns – in cooperation with partners who, in turn, believe and invest in our
common development plan.
And these are responsible choices, directed towards future growth, which can be achieved only
by those with substantial economic strength and constantly reducing financial position.
Luciano Benetton
Chairman of the Benetton Group
LE T TE R TO S H A R E H O LDERS
7

Financial highlights
Key operating data [millions of euro] 2004 % 2003 % 2002 % 2001 % 2000 %
Revenues 1,686 100.0 1,859 100.0 1,992 100.0 2,098 100.0 2,018 100.0
Cost of sales 929 55.1 1,049 56.4 1,124 56.4 1,189 56.7 1,138 56.4
Gross operating income 757 44.9 810 43.6 868 43.6 909 43.3 880 43.6
Contribution margin 653 38.7 696 37.4 744 37.3 776 37.0 740 36.7
EBITDA 317 18.8 335 18.0 376 18.8 398 19.0 400 19.8
Income from operations 217 12.9 232 12.5 243 12.2 286 13.6 309 15.3
Net income/[loss] for the year 123 7.3 108 5.8 [10] [0.5] 148 7.1 243 12.1
Key financial data [millions of euro] 2004 2003 2002 2001 2000
Working capital 688 729 798 811 772
Assets due to be sold 8 8 114 - -
Net capital employed 1,668 1,655 1,768 1,896 1,723
Net financial position 431 468 613 640 536
Shareholders’ equity 1,230 1,174 1,141 1,241 1,175
Self-financing 312 327 349 374 311
Investments in tangible
and intangible fixed assets 152 151 169 311 305
Purchase of equity investments 22 19 1 - 7
Financial ratios [in %] 2004 2003 2002 2001 2000
Return on equity [ROE] 10.0 9.2 [0.9] 11.9 20.7
Return on investments [ROI] 13.0 14.0 13.7 15.1 17.9
EBITDA 18.8 18.0 18.8 19.0 19.8
Return on sales [ROS] 12.9 12.5 12.2 13.6 15.3
Net income [loss]/Revenues 7.3 5.8 [0.5] 7.1 12.1
Share and market data 2004 2003 2002 2001 2000
Earnings/[Loss] per share [euro] [1] 0.68 0.59 [0.05] 0.82 1.35
Shareholders’ equity per share [euro] [1] 6.77 6.47 6.29 6.86 6.50
Dividend per share [euro] [1] 0.34 0.38 0.35 0.41 0.46
Pay out ratio [%] 50 64 n.a. 50 37
Dividend yield 3.9 3.8 4.8 3.6 4.8
Share price: December 31 [euro] 9.74 9.11 8.50 12.72 22.01
Screen-based market: high [euro] 10.18 11.30 15.90 22.44 24.20
Screen-based market: low [euro] 8.33 5.90 8.50 9.75 18.71
Price/earnings ratio [P/E] 14.3 15.4 n.a. 15.5 16.5
Share price/Shareholders’ equity per share 1.4 1.4 1.4 1.9 3.4
Market capitalization [millions of euro] 1,768 1,654 1,543 2,309 3,996
Average no. of shares outstanding [2] 181,558,811 181,558,811 181,341,018 180,720,969 180,505,910
Number of shares outstanding 181,558,811 181,558,811 181,558,811 181,558,811 181,558,811
[1] Restated after a reverse split of the shares approved by Shareholders’ Meeting on May 8, 2001.
[2] Net of treasury shares held during the year.

2004 revenues by activity [in %]
Ricavi 2004 per area geografica (in %)
Ricavi netti
Ricavi netti
Sportswear and equipment 4.4%
Manufacturing and other 6.4%
Casual 89.2%
2004 revenues by geographical area [in %]
Rest of the world 0.3%
Asia 10.3%
The Americas 4.3%
Europe 85.1%
Net revenues [millions of euro]
Total capital expenditures and self-financing [millions of euro]
Total capital expenditures
Self-financing
174
312
170
327
170
349
311
374
312
311
1,686
1,859
1,992
2,098
2,018
2004
2003
2002
2001
2000
2004
2003
2002
2001
2000
F I NANC IAL H I G H LIGHTS
9

The Benetton Group, in 2004, can be briefly summarized as follows: consolidated revenues of 1,686
million euro, impacted by the sale of the sports equipment business [completed during the first half
of 2003] and by continuing unfavorable trends in the principal foreign currency exchange rates;
increasing net income, in line with forecasts, and a satisfying cash flow, with a significant gain in
efficiency on the costs front; balance sheet strength, confirmed as being of the first order.
With consumers being very cautious in their spending and a deflationary trend generated by
both economic uncertainty and the ending of the multifiber agreement with China, the market is
presenting complex challenges. The economic environment, in the principal European markets in
particular, continues to be cautious.
But the Group can count on significant strengths to compete in this highly competitive situation.
I would particularly like to mention, on the one hand, a network of expert and experienced partners
who work for and invest in the brand; and on the other, a management team that combines
the traditional innovative Benetton culture with new and ambitious management and planning
capabilities.
In conclusion, we believe that we have strong foundations for the competitive relaunch of our
business model in the medium term, which will enable the Group to compete in all international
markets in future years.
Silvano Cassano
Managing Director
Directors’ report
Markets, trademarks and licenses
The areas with highest growth in 2004 were Eastern European countries and Russia, followed
by Spain and Switzerland where our presence was further consolidated. In a market of primary
importance like Germany, our position was strengthened by a joint venture agreement and
purchase of stores to be managed directly. The retail network has reached 200 stores in the
principal international capitals of fashion; this is strategic for the protection of commercial
positions which are already important or tactical for future development. In 2004, there were
new openings in Paris, in the prestigious Boulevard Haussmann, as well as in Berlin, Stuttgart,
“Our market response must travel at the same speed as
our ideas.” Fabrizio De Nardis, Chief Commercial Officer
Stockholm, Fukuoka in Japan and St. Moritz in Switzerland.
Regarding emerging countries, plans for commercial agreements are being studied in
Middle-Eastern markets and an organization has been set up in India, controlled from Hong
Kong, which is directly managing production and sales in the local market.
D I R EC TO R S’ R E P O RT
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D I R EC TO R S’ R E P O RT
12
The stores network has been involved in a program to change internal architecture, developed
following specific and consistent concepts with a more precise and distinctive positioning of
the various brands. During 2004, the new Twins concepts were launched for UCB, designed
to express the various styles in the collections more effectively, and for Undercolors. In 2005,
Pentagram, the new Sisley concept will make its debut.
Also in 2004, a progressive sales policy action was introduced which, confirming the central
role and value of the partner-entrepreneur system, aims to achieve greater competitiveness
based on more pronounced flexibility in terms of pricing and margins, which should guarantee
benefits both to the sales network, providing investment to keep it fresh and efficient, and to
the final customer.
In terms of product mix, a program was started to enhance the accessory collections
of the various brands, with the twofold objective of completing the proposed “looks” and
of providing interesting independent purchasing opportunities. A single team is involved in
this, combining design, marketing and sourcing skills.
On the license front, during 2004, development continued, in cooperation with highly
experienced and competent companies and producers, in sectors [from furnishing to
publishing, from fabrics to décor, from perfume to stationery] in which Benetton taste, design
and “way of life” make an innovative and unique contribution. In particular, agreements were
signed in the jewelry and contraceptive sectors and the widening of the product ranges offered
continued, from toys to children’s books, with Benny the sheep, the Benetton brand mascot,
as the star.
Production organization
Capital expenditure was directed above all towards the managerial independence of
production centers in Croatia, Hungary and Tunisia, which operate complete cycles [from
“ The production organization has its head in Italy and its
operations arm without borders.” Biagio Chiarolanza, Chief Operating Officer
raw material to finished product] and on quality control systems which fully meet the strictest
Benetton Group standards.
In an ever more competitive scenario, the production organization, which maintains its
strategic heart [design, planning, coordination and programming] in Italy, is arranged into a
dual production line: in Italy, based mainly on a logic of speed of response to the market,
and abroad, where efficiency is combined with the necessary cost control. The process of
decentralization of production activities within Europe continued during the year.
Special attention was given to the “sourced products” area, with total outsourcing of
production, reserved for particular products and specific markets like China. This area
of activity, among other things, has triggered competitive benefits within the Benetton
organization, in terms of cost reduction and shortening of production times.
In 2004, the Hong Kong sourcing platform was completed, which, with 40 specialists, ensures
faster action and better customer service in the markets of China, Far Eastern countries, Japan
and the United States.
In addition, the new “multi-hub” model was designed and implemented for management
of the international logistics platform. This model is supported by a centralized I.T. system,
accessible to the various logistics centers, which is able to coordinate and optimize, from the

2004 net sales by brand [in %]
Net sales by brand [in %]
United Colors of Benetton
72.0 %
United Colors of Benetton
67.5%
Ricavi x settore di attività
United Colors of Benetton 72.0%
Other 6.4%
Playlife 2.0%
Killer Loop 0.7%
Sisley 18.9%
Revenues by activity [in %]
Casual
89.2%
Casual
84.9%
Sisley
18.9%
Sisley
19.0%
Killer Loop
0.7%
Playlife
1.4%
Playlife
2.0%
Sportswear
and equipment
4.4%
Sportswear
and equipment
8.6%
Other
6.4%
Other
6.2%
Rollerblade
3.3%
Nordica
0.3%
Prince and Ektelon
1.5%
Killer Loop
0.8%
Manufacturing
and other
6.4%
Manufacturing
and other
6.5%
2004
2003
2004
2003
D I R EC TO R S’ R E P O RT
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D I R EC TO R S’ R E P O RT
14
headquarters, dispatches of products according to required delivery date and geographic
location of the customer, combining timeliness of information and better control of the
business.
The new Product Technical function was brought into operation, which, acting as a link
between product, operations and commercial functions, focuses efforts and resources on
the common objectives of innovation and programming, also working with research centers,
universities and laboratories.
Human resources
During the year, Human Resources function concentrated on the development of an
organization which is able to merge the innovative capacity of new resources with the company
culture that encompasses the experience and strong managerial tradition of Benetton.
“The human capital at the center of the company,
a mix of innovative abilities and historical knowledge.”
Andrea Negrin, Human Resources Officer
One of the many projects under development to be implemented was Project Vivaio, aimed at
identifying company resources of high-potential young people, to be integrated, in line with the
company’s multicultural and international vision, with talents coming from all over the world,
people with innovative abilities to be fitted into the three key areas of sales and marketing,
product and operations.
Another important project implemented in the year was the Product Technology Center, a
center of excellence which cooperates with the most prestigious international institutes
and universities [from the Massachusetts Institute of Technology to The Milan Politecnico],
dedicated to the development of new and innovative materials, fabrics and products to be
introduced into the production lines.
Information technology
The most significant initiative in the year was part of Project Phoenix, of which the main
objective is to support the core business through total systems integration. A new production
planning project was initiated which provides for a complete review of the process and for
“Investments in Information Technologies are the new frontier
of competition.” Adolfo Pastorelli, Chief Information Technology
application and technological updating of the systems used. This project forms part of a
complete review of the production and logistics structure in order to achieve a shorter time to
market than at present, and with optimized and coordinated customer deliveries.
The work related in particular to the merchandized products support system [from planning
to production by the chosen supplier, from Benetton quality control to delivery to the
customer] with high savings in terms of costs and time. IT support was also implemented for

the new logistics/distribution structure in Hong Kong for products sourced in the Far East:
a “multi-hub” model which will contribute to increase our international presence due
to greater timeliness of information flows, combined with better control of all activities.
Concerning the foreign production centers, the new production control system has enabled
us to monitor stages of production in the various production units in real time and to make
projections for the dispatch of orders.
Accounting, tax and corporate organization
The impact of the introduction of International Accounting Standards/International Financial
Reporting Standards [IAS/IFRS] is currently being analyzed, with the resultant organizational
repercussions, also in terms of training and information systems.
A project has also been started to adjust for the requisites of the Sarbanes Oxley Act, the
2002 American law that requires companies listed on the NYSE to provide and document a
detailed control and documentation system for company processes and data reported in the
financial statements. This project will ensure Benetton Group compliance within the time
limits set by the law.
Finally, during 2004, the Company has been working on consolidation of the corporate
structure created by the business reorganization which took place in December 2003.
Investor relations
During 2004, Investor Relations stayed in constant touch with the market: in the year, various
meetings were organized with members of the national and international financial community
and major brokers continuously publicized research on Benetton shares.
The department’s activities also included telephone conferences at the time of publication
of the results, organization of days dedicated to financial analysts, which involved top
management and some operational managers, as well as participation in sector conferences.
2004 also saw the celebration of 15 years listing on the NYSE. On that occasion, June 8, the
Benetton Group took part in the ceremony at the end of the New York Stock Exchange
working day, ringing the traditional closing bell.
“ Financial soundness and strong operational leverage are
the certainties which can be relied on for future growth.”
Pier Francesco Facchini, Chief Financial Officer
During 2004, the Benetton Group Investor Relations website was enhanced with new sections:
IAS/IFRS, Glossary, “Share your thoughts”, FAQ [Frequently Asked Questions]. The structure of
the Corporate Governance and Analyst coverage sections were revised to enhance the contents
and make navigation easier.
The website characteristics of completeness, clarity and ease of navigation, in April, earned the
Group the prize for the best European IR website in 2004 and, in September, it was awarded the
prize for the best IR website in the consumer goods sector by the Web Marketing Association.
In September 2004, an identification of the composition of shareholders was completed, which
showed the subdivision of shares on the market by geographical area; in particular, shares
held by European investors were equivalent to 67% of the total floating shares [33%], while
American investors represented 31%.
D I R EC TO R S’ R E P O RT
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D I R EC TO R S’ R E P O RT
16
Communications
In 2004, Fabrica, the Benetton communication research center had its tenth birthday. What
immediately became a workshop where communication for the future could be planned
and, at the same time, tested in the field, is now an international, multicultural center which
participates in the free circulation of opinions and in the debate on ideas. The anniversary,
celebrated by a book published by Electa, also provided an opportunity to highlight the role of
Fabrica, as a frontier outpost of the Benetton Group business culture.
Fabrica ran the United Colors of Benetton 2004 fall-winter communication campaign,
which showed pictures of orphaned primates confiscated from illegal traders. The campaign
continues Benetton’s reflection on diversity, seen as the “richness” of our world, extending
it from the variety of human races to living beings that occupy first place in zoological
classification. It was presented in London in October, at the Natural History Museum, which
will host the entire exhibition of pictures from May to July 2005. The English publisher Boots
has published the book James and other Apes with an introduction by Jane Goodall, one of the
leading experts on the science of animal behavior and habitat and the defense of nature, who
backed the Benetton project.
Also in fall season, the product campaign, photographed by David Sims for Fabrica, was
launched; this reaffirmed the values of the United Colors of Benetton brand, in particular
color, youth and contemporary style.

Corporate Governance
Corporate Governance. Again, in 2004, the Benetton Group paid particular attention to
corporate governance, continuing with the adaptation of organization structures relating to
control, decision-making and management to best national and international practice, complying
with the standards required by the Code of Conduct for Listed Companies.
The corporate governance system, as outlined below, is based on the principles of proper
management and information, achieved by means of a continuous process of verification of their
efficiency and effectiveness.
The Company has adopted a traditional system of corporate governance by virtue of which the
management body of the Company is the Board of Directors, the monitoring body relating to
compliance with such matters as the law, the articles of association and the principles of correct
administration is the Board of Statutory Auditors, while the independent auditors carry out the
accounting audit.
Ownership of the Company. As described in greater detail in the “Ownership of the
Company” section of the Directors’ report relative to the 2004 financial statements and based
on the latest available report, the Shareholder Edizione Holding S.p.A. controls the Company
with a shareholding of 67.144%.
Board of Directors. Directors.
Executive Committee, Related Party Transactions.
Board of Directors. During 2004, the Board of Directors held eight meetings during which they
reviewed and approved guidelines for the Group’s operations, proposals for changes to the
organization and general policies regarding the management of human resources, proposals
for the reorganization of the corporate structure, the trend of business, extraordinary
operations, and the quarterly and half-year results.
During these meetings, the Executive Directors also provided adequate information to the
Board of Directors and to the Board of Statutory Auditors concerning any significant, atypical
or unusual transactions or transactions with Related Parties. The Board of Directors also
paid particular attention to the periodic reports prepared by the Internal Audit Committee
regarding its activities and, amongst other things, evaluation of the adequacy of the internal
audit system.
For Board meetings, Directors are provided, sufficiently in advance, with all the documentation
and information needed to enable the Board to make decisions with adequate background
knowledge of the matters in question.
The current system of powers granted by the Board of Directors on May 12, 2004, as
illustrated below, and the information procedures adopted by the Company ensure that
all transactions of major economic and financial importance are submitted for Board
approval. The code of conduct relating to “transactions with Related Parties” and “significant
transactions”, adopted by the Company on March 30, 2004, also requires that the Executive
Directors, although having the relative powers, submit for prior approval of the Board of
Directors, any transactions with significant balance sheet, profit or financial impacts for the
Company and the Group. For significant transactions which exceed a value of 1.5 million euro,
each Director or Statutory Auditor has the right to ask for an evaluation by one or more
independent experts.
D I R EC TO R S’ R E P O RT
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D I R EC TO R S’ R E P O RT
18
Directors. The Board of Directors, which remains in office until the Shareholders’ meeting
to approve the financial statements to December 31, 2004, is made up of eleven Directors.
On September 9, 2004, the Company, at the time of adopting some changes to the articles
of association resulting from coming into effect of the recent reform of company law, took the
opportunity to increase the maximum number of members of the Board of Directors from
eleven to fifteen.
The Chairman, Luciano Benetton, has power to represent the Company and to carry out all
acts that are pertinent to the Company’s activities, with limits on certain categories of acts and
in particular the following operations:
_ purchase and sale of shareholdings, company stocks and bonds for amounts over
25 million euro;
_ purchase and sale of companies and businesses, purchase and sale of real property
for amounts over 25 million euro;
_ granting of loans to persons or entities other than subsidiary companies for amounts
over 5 million euro.
The Managing Director, Silvano Cassano, has power to carry out acts relating to ordinary
administration, as well as certain acts of extraordinary administration, subject to limits on
values for the following operations in particular:
_ purchase and sale of shareholdings and company stocks for amounts over 5 million euro;
_ purchase and sale of securities and bonds for amounts over 10 million euro;
_ purchase and sale of companies and businesses, purchase and sale of real property
for amounts over 10 million euro;
_ granting of loans to persons or entities other than subsidiary companies for amounts
over 5 million euro.
None of the other Directors have executive powers.
There are seven Non-Executive Directors [Carlo Benetton, Gilberto Benetton, Giuliana
Benetton, Reginald Bartholomew, Luigi Arturo Bianchi, Sergio De Simoi and Ulrich Weiss]
and, of these, three [Reginald Bartholomew, Luigi Arturo Bianchi and Ulrich Weiss] are
“independent” from the owners and from corporate management, as prescribed by the Code
of Conduct for Listed Companies, while all are assiduous participants in the Board’s activities.
The Board of Directors, also based on information supplied by the Directors themselves,
annually checks the existence of the requirements of independence of each of its members in
accordance with the Code of Conduct for Listed Companies.

The following table lists the offices which Directors hold in other companies not belonging to
the Group:
Director Office Company
Luciano Benetton Director 21,Investimenti S.p.A., Edizione Holding S.p.A.
Carlo Benetton Deputy Chairman Edizione Holding S.p.A.
Director Tecnica S.p.A.
Gilberto Benetton Chairman Autogrill S.p.A., Edizione Holding S.p.A., Ragione S.A.p.A.
di G. Benetton & C.
Deputy Chairman Telecom Italia S.p.A., Olimpia S.p.A.
Director Banca Antoniana Popolare Veneta S.p.A., Mediobanca S.p.A.,
Autogrill Group Inc., Lloyd Adriatico S.p.A.,
Autostrade S.p.A., Pirelli & C. S.p.A. , Schemaventotto S.p.A.
Giuliana Benetton Director Edizione Holding S.p.A.
Alessandro Benetton Chairman and
Managing Director 21,Investimenti S.p.A., 21,Investimenti Partners S.p.A.
Chairman 21,Partners S.G.R. S.p.A.
Deputy Chairman Nordest Merchant S.p.A.
Sole Director Saibot S.r.l.
Director Edizione Holding S.p.A., Autogrill S.p.A., Sirti S.p.A.,
Permasteelisa S.p.A., 21,Centrale Partners S.A.
[member of the Supervisory Board]
Reginald Bartholomew Director Pirelli & C. Real Estate S.p.A.
Luigi Arturo Bianchi Director Anima S.G.R. S.p.A., Assicurazioni Generali S.p.A.
Gianni Mion Deputy Chairman Tim S.p.A.
Managing Director Edizione Holding S.p.A., Schemaventotto S.p.A.
Director 21,Investimenti S.p.A., Autogrill S.p.A., Autogrill Group Inc.,
Autostrade S.p.A., Cartiere Burgo S.p.A.,
Banca Antoniana Popolare Veneta S.p.A., Olimpia S.p.A.,
Telecom Italia Media S.p.A., Telecom Italia S.p.A.,
Fondazione Cassa di Risparmio di Venezia,
Luxottica Group S.p.A.
Sergio De Simoi Auditor Olimpia S.p.A.
Director Autostrade S.p.A., Schemaventotto S.p.A.,
21,Investimenti Partners S.p.A., 21,Investimenti S.p.A.
Ulrich Weiss Director Ducati Motors S.p.A., HeidelbergCement AG [Heidelberg],
Continental AG [Hannover], Bego Medical AG [Bremen]
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Executive Committee. An Executive Committee was set up in September 2003, consisting, in
addition to the Chairman Luciano Benetton, of the Managing Director Silvano Cassano and
Directors Alessandro Benetton and Gianni Mion.
Executive Committee meetings are also attended by the Board of Statutory Auditors and the
Chairman of the Internal Audit Committee, neither of which have the right to vote.
One of the Executive Committee’s tasks is to define, upon proposal by the Managing Director,
Company and Group strategic, industrial and financial plans, the annual budget and interim
adjustments for subsequent submittal to the Board of Directors.
The Executive Committee also reviews and approves investment and divestiture plans
of particular importance, the granting of loans and the giving of guarantees, and analyzes
the more important problems relating to the Company’s performance, which in turn enables
the Board of Directors to comply more effectively with its legal obligations.
The Executive Committee met seven times during 2004.
Related Party Transactions. On March 31, 2004, the Board of Directors formally adopted the
Rules of Conduct that Benetton Group S.p.A. will have to comply with in matters regarding
Related Party Transactions and significant transactions. These Rules reiterate the central role
of the Board of Directors in the Company’s system of corporate governance and aims to
ensure that the transactions being regulated are carried out according to criteria of substantial
and procedural fairness.
Related Party Transactions, also non-intercompany transactions, which are atypical, unusual or
concluded with non-standard conditions, even though not normally subject to Board approval,
must, nevertheless, be submitted for prior Board approval.
Prior Board of Directors’ approval is also required for transactions that could have a significant
economic or financial impact on the Company or the Group and which in terms of value,
counterparty quality, object, methods or timing could jeopardize the Company’s assets.
For both of these types of transactions, the Board of Directors has to decide on the basis,
among other things, of detailed information acquired with suitable advance notice.
The above-mentioned Rules of Conduct do not expressly provide for directors with an
interest in an operation to leave the board meeting. Therefore it is left to the Board to decide
whether it is suitable or not to leave when this could prejudice the maintenance of a quorum
in the meeting.
The Rules of Conduct in relation to significant transactions and transactions with Related
Parties have been adopted by subsidiary companies in 2005.
Board of Statutory Auditors. The Board of Statutory Auditors is made up of:
_ Angelo Casò . Chairman;
_ Filippo Duodo . Auditor;
_ Dino Sesani . Auditor;
_ Antonio Cortellazzo . Alternate Auditor;
_ Marco Leotta . Alternate Auditor.
All members of the Board of Statutory Auditors were appointed on May 14, 2002. Their
mandate expires on the date of the Shareholders’ Meeting to approve the 2004 financial
statements.
The Statutory Auditors are appointed, in accordance with the criteria laid down in art. 148
of the Finance Consolidation Act, which is implemented in art. 19 of the articles of association,
on the basis of voting lists submitted to the Company’s registered office prior to the
Shareholders’ Meeting, accompanied by an adequate description of each candidate’s personal
and professional characteristics.

D I R EC TO R S’ R E P O RT
22
There is no Auditor representing the minority Shareholders, as they did not present
alternative voting lists.
The Board of Statutory Auditors met seven times during 2004.
Management and coordination in accordance with articles 2497 and subsequent of the
Italian Civil Code. In January 2004, all of the Italian subsidiaries, directly or indirectly wholly
owned by Benetton Group S.p.A., made the announcements required by art. 2497-bis of
the Italian Civil Code, recognizing the management and coordination function performed by
the Parent Company Benetton Group S.p.A.
Compensation Committee and Committee for Proposed Appointments of Directors.
In implementation of the Code of Conduct for Listed Companies and with the duties
mentioned therein, the Board of Directors reconfirmed, as members of the Compensation
Committee for 2004, Directors Reginald Bartholomew, Ulrich Weiss and Gianni Mion,
Chairman. The Committee, therefore, consists mainly of non-executive directors; in view
of the composition of the shareholders, a non-independent director is included among the
members of the committee.
The Compensation Committee, by express provision of the relative rules governing its
activities, formulates its proposals for submission to the Board of Directors, in the absence
of persons directly interested, who leave the meeting during discussions and resolutions
concerning them.
During 2004, the Compensation Committee met three times.
For fiscal year 2004, compensation for executive Directors and/or Directors with special tasks
was apportioned by the Board of Directors on the basis of the proposal formulated by the
Compensation Committee, in the amounts indicated in the notes to the consolidated financial
statements of the Benetton Group, following the determination of the aggregate compensation
by the Shareholders’ Meeting, in accordance with the Articles of Association.
During the reference year, the Compensation Committee also proposed, having used a
company with experience in the preparation of variable compensation schemes, adoption
of a Stock Option Plan aimed at motivation and retention of the Company’s top managers.
After adoption of the Plan by the Board of Directors on July 15, 2004, the Compensation
Committee provided the Board with further indications of the number of options to be
assigned and the identity of the persons to receive them. The said Stock Option Plan is linked
to company results and achievement of preset objectives.
Further information is shown in the paragraph “stock option” in the Directors’ Report
accompanying the statutory and consolidated financial statements of Benetton Group S.p.A.
Given the current composition of the Company’s Shareholders, the Board of Directors does
not consider it necessary yet to set up a Committee for proposed appointments of Directors.
Directors are nominated on the basis of a single voting list which is deposited at the
Company’s head office prior to the Shareholders’ Meeting, accompanied by an adequate
description of the candidates’ personal and professional characteristics.
Internal Audit Committee. Internal audit. The Internal Audit Committee is made up of three
Non-Executive Directors, two of whom are independent. On May 12, 2004, the appointments
of Directors Ulrich Weiss, Luigi Arturo Bianchi and Sergio De Simoi were confirmed.
The Internal Audit Committee has the following tasks:
_ make proposals for the establishment of an internal audit department responsible for the
internal audit and to determine the duties of this department;
_ review periodic reports, reporting relationships and the executive plan of persons

esponsible for internal audit, also promoting actions for the improvement of the internal
audit system;
_ report to the Board of Directors, at least every 6 months, in connection with its approval
of year-end financial statements and the half-year report, on activities carried out and on
the adequacy of the internal audit;
_ monitor compliance with, and periodic revision of, corporate governance rules;
_ verify, together with the head of the finance function and the independent audit company,
the adequacy of accounting principles used;
_ assess, together with the heads of the finance and internal audit functions, proposals
submitted by independent auditing firms for assignment of the independent audit, making
a recommendation for assignment of the task that the Board of Directors has to submit to
the Shareholders’ Meeting;
_ evaluate the results presented in the independent auditor’s report.
The Committee performed its functions during 2004, meeting five times under the
chairmanship of Ulrich Weiss and with the participation of the entire Board of Statutory
Auditors, in conformity with the regulations adopted by the Company.
The functionality and adequacy of the internal audit system were guaranteed by the Board of
Directors, with the help of the specific corporate function coordinated by the Head of Internal
Audit. Organization and information systems were found to be able to assure, also as regards
subsidiaries, monitoring of the administrative and accounting system and of the central and
decentralized organizational structure. Work continued on mapping of processes and risks
concerning the activities of all Group companies, as well as operational and budget control
of individual businesses and review of internal auditing procedures.
These activities, taking into account the listing of Benetton shares also on the United States
stock exchange, were carried out observing likewise the regulatory provisions contained in the
so-called “Sarbanes-Oxley Act”.
Non-Executive Directors, the Board of Statutory Auditors, and the independent auditing firm
all received adequate information in this respect.
During 2004, the Internal Supervisory and Monitoring Body, as required by article 6,
paragraph 1 letter b] of Legislative Decree 231/2001, consisting of Ulrich Weiss, Chairman,
Luigi Arturo Bianchi and Roberto Taiariol, performed its checks on operation and observance
of the Organizational and Operational Model adopted by the Company. This Model, you are
reminded, consists of:
_ a code of ethics and of conduct;
_ operating procedures and reporting systems;
_ an internal supervisory and monitoring body;
_ a disciplinary system.
The Organizational and Operational Model was also adopted by the main Group companies
during 2004.
Handling of confidential information. All confidential information is managed by the Managing
Director, upon consultation with the Chairman. Together, the Managing Director and the
Chairman also ensure that adequate checks are carried out with regard to the classification of
confidential information in accordance with current legislation.
The Board of Directors approves all press releases relating to approval of the annual financial
statements, the half-year report, and the quarterly report, as well as extraordinary operations
that are subject to the approval of the Board of Directors.
All communications to and relations with the press, institutional investors and individual
D I R EC TO R S’ R E P O RT
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D I R EC TO R S’ R E P O RT
24
Shareholders are conducted by the Media and Communications Department and the Investor
Relations Department, respectively.
Implementing the “Regulation for Markets Organized and Managed by Borsa Italiana S.p.A.”
[Regolamento dei Mercati Organizzati e Gestiti da Borsa Italiana S.p.A.], since fiscal year 2002,
the Board of Directors has officially adopted the “Code of Conduct for Internal Dealing”.
This is designed to regulate obligations of notification and disclosure concerning transactions
undertaken in financial instruments issued by Benetton Group S.p.A. by those persons defined
by the Code as “Important Persons”.
The notification obligations imposed by the Code on “Important Persons” provide for tighter
timing and involve wider categories of subjects and securities than does the Regulation of Borsa
Italiana S.p.A.
Since Benetton Group S.p.A. shares are also listed on the Frankfurt stock exchange, the Code
of Conduct also implements the obligations of notification and disclosure provided by the
Wertpapierhandelsgesetz – WpHG law [Securities Trading Act], Section 15a, introduced by
the 4th Finanzmarktförderungsgesetz [Fourth Financial Markets Promotion Act].
Relations with Institutional Investors and with other Shareholders. The Investor Relations
Department ensures correct management of relations with financial analysts, institutional
investors and individual Italian and foreign Shareholders. Among other things, this department
co-ordinates activities with members of the Financial Community.
This function complies with the criteria of fairness, clarity and equal access to information
contained in the “Market Information Guide” drafted by Borsa Italiana S.p.A., making available
in the Investor Relations section of the Company’s website http://www.benettongroup.com/
investors/ ample documentation and information concerning the Company, with particular
reference to price-sensitive information.
The following documents, among others, are available on the site: the Articles of Association,
the Code of Conduct for Internal Dealing, the Organizational and Operational Model, the
Rules of Conduct in Related Party Transactions, press releases and periodical financial
information.
This document is available on website http://www.benettongroup.com/investors/ in the
Corporate Governance section.

Supplementary information
Benetton shares and shareholdings
Treasury shares. During the period, Benetton Group S.p.A. neither bought nor sold any
treasury shares or shares or stock in parent companies, either directly or indirectly or through
subsidiaries, trustees or other intermediaries.
Shares held by Directors and Statutory Auditors. Directors Luciano, Gilberto, Giuliana and Carlo
Benetton directly and indirectly hold equal interests in the entire share capital of Edizione
Holding S.p.A., the parent company of Benetton Group S.p.A. and owner of 67.144% of the
share capital.
Except as indicated, Directors Luciano, Gilberto, Giuliana and Carlo Benetton [including
their not legally separated spouses and children who are minors] have not, during 2004, held
other shares in Benetton Group S.p.A. or in subsidiary companies, either directly or through
subsidiaries, trust companies, or third parties, except as indicated below, referring to Gilberto
Benetton.
As indicated in the statements received, during 2004 no other equity investments in the
Company have been held by its other Directors and Statutory Auditors, except those
indicated in the table below:
Number of Number Number Number of
shares held as of of shares of shares shares held as Type of
Name and surname 12.31.2003 Company purchased sold of 12.31.2004 ownership
Gilberto Benetton 45,000 Benetton Group S.p.A. - - 45,000 Owned
Alessandro Benetton 4,000 Benetton Group S.p.A. - - 4,000 Owned
Ulrich Weiss 3,500 Benetton Group S.p.A. - - 3,500 Owned
Stock option plan. The resolution of the extraordinary Shareholders’ Meeting authorized the
Board of Directors, in accordance with article 2443 of the Italian Civil Code, to decide, also
more than once and for a maximum period of five years from the date of the shareholders’
meeting resolution, to increase the share capital, for cash, one or more times, with the
consequent issue of ordinary shares, with normal ownership, to be offered for subscription
by employees of Benetton Group S.p.A. and subsidiary companies at prices equivalent to the
nominal value of 1.30 euro each, as well as a share premium determined at the time they are
assigned, on the basis of the arithmetic average of share prices recorded in the last month
in Borsa Valori di Milano [Milan Stock Exchange], excluding option rights in accordance with
article 2441, final paragraph of the Italian Civil Code, for a maximum total of 6.5 million euro,
through the issue of a maximum of 5,000,000 ordinary shares with a nominal value of 1.30
euro each.
The Board of Directors on the same date resolved to increase, for cash, the share capital
by 236,026,454.30 euro to 240,230,104.40 euro to service the share incentive Plan, issuing
3,233,577 options which confer the right to subscribe to the same number of Company shares,
at a price of 8.984 euro. If the resolved increase is not fully subscribed within the period from
time to time fixed for the purpose, the capital will be increased by an amount equivalent to
subscriptions received at the expiry of this period.
These stock options represent an instrument to motivate and retain, in the medium-long term,
employees and directors, selected from among the top executives of the Company and its
subsidiary companies, who hold offices which are considered the most important strategically.
D I R EC TO R S’ R E P O RT
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D I R EC TO R S’ R E P O RT
26
The assignment cycle envisaged consists of a period when exercise of the options is restricted
of four years from the date of assignment [the so-called vesting period] and a further period
of five years for exercise of the options; however, under certain conditions, there will be the
possibility of exercising up to a maximum of 50 % of options assigned two years after the date
of assignment.
The proportion of offers assigned that will become effectively exercisable, once the vesting
period of four years has passed, will depend on the level of achievement, accumulated in the
vesting period, of preset objectives which are used as indicators of EVA [Economic Value
Added] performance with reference to the 2004/2007 four year period.
More details are contained in the “Stock Option Plan Rules” available under “Codes” in the
Corporate Governance/Investor Relations section of the Company’s website.
Ownership of the Company. Edizione Holding S.p.A. [with registered office in Treviso, Italy],
a holding company, wholly owned by the Benetton family, has the majority holding in the
Company with 121,905,639 ordinary shares, equivalent to 67.144%.
Shareholders by class %
Edizione Holding S.p.A. 67.144
Institutional investors and banks 17.220
Other investors 15.636
By size of holding [1] No. of shareholders Number of shares
From 1 to 4,999 shares 27,221 10,502,130
From 5,000 to 9,999 shares 206 1,395,851
Over 10,000 shares 371 176,692,592
Holdings not classified [7,031,762]
Total 27,798 181,558,811
[1] As per last Spafid survey as of January 13, 2005.

Performance of Benetton shares. The performance of Benetton shares during 2004 was
positive overall, with an increase of 6.9% compared with December 31, 2003, against a Mibtel
performance of 18.1% and a Midex performance of 12.6%.
In the American market, Benetton ADRs [American Depositary Receipts] went up by 17.4%
with increased trading during the year.
Share and market data 2004 2003 2002 2001 2000
Earnings/[Loss] per share [euro] [1] 0.68 0.59 [0.05] 0.82 1.35
Shareholders’ equity per share [euro] [1] 6.77 6.47 6.29 6.86 6.50
Dividend per share [euro] [1] 0.34 0.38 0.35 0.41 0.46
Pay out ratio [%] 50 64 n.a. 50 37
Dividend yield 3.9 3.8 4.8 3.6 4.8
Share price: December 31 [euro] 9.74 9.11 8.50 12.72 22.01
Screen-based market: high [euro] 10.18 11.30 15.90 22.44 24.20
Screen-based market: low [euro] 8.33 5.90 8.50 9.75 18.71
Price/earnings ratio [P/E] 14.3 15.4 n.a. 15.5 16.5
Share price/Shareholders’ equity per share 1.4 1.4 1.4 1.9 3.4
Market capitalization [millions of euro] 1,768 1,654 1,543 2,309 3,996
Average no. of shares outstanding [2] 181,558,811 181,558,811 181,341,018 180,720,969 180,505,910
Number of shares outstanding 181,558,811 181,558,811 181,558,811 181,558,811 181,558,811
[1] Restated after a reverse split of the shares approved by Shareholders’ Meeting on May 8, 2001.
[2] Net of treasury shares held during the year.
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
2,500,000
2,000,000
1,500,000
1,000,000
500,000
Performance of ordinary share and Benetton ADR - Dec. 31, 2003 to Dec. 31, 2004
01.02.04
01.02.04
02.02.04
02.02.04
03.01.04
04.01.04
05.03.04
06.01.04
Volume Share [euro]
03.01.04
04.01.04
05.03.04
06.01.04
Volume ADR [US $]
07.01.04
07.01.04
08.02.04
08.02.04
09.01.04
09.01.04
10.01.04
10.01.04
11.01.04
11.01.04
12.01.04
12.01.04
12.31.04
12.31.04
10.5
10.0
9.5
9.0
8.5
8.0
28.0
26.0
24.0
22.0
20.0
D I R EC TO R S’ R E P O RT
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Relationships between the parent company, its subsidiaries and other related parties.
The Benetton Group has limited trade dealings with Edizione Holding S.p.A. [the parent
company], with subsidiary companies of the same and with other parties which, directly or
indirectly, are linked by common interests with the majority Shareholder. Trading relations
with such parties are conducted on an arm’s-length basis and using the utmost transparency.
These transactions relate mostly to purchases of tax credits and services.
In addition, Italian Group companies are participating in a national tax consolidation per
article 117 and subsequent of the Tax Consolidation Act DPR 917/86 based on a proposal by
the consolidating company Edizione Holding S.p.A. which exercised the option for this regime
on December 31, 2004. The duration of the option is three years starting from the 2004 fiscal
year. The relationships arising from participation in the consolidation are governed by specific
Rules approved and signed by all participating companies.
The relevant totals appear below:
[thousands of euro] 2004 2003
Accounts receivable 32,864 1,198
_ including for participation in the Edizione Holding S.p.A. tax consolidation 32,283 -
Accounts payable 19,285 11,049
_ including for participation in the Edizione Holding S.p.A. tax consolidation 18,664 -
Purchases of raw materials 2,982 3,432
Other costs and services 13,229 13,863
Sales of products 17 76
Revenue from services and other income 937 776
The Group has also undertaken some transactions with companies directly or indirectly
controlled by, or in any case, under the influence of, managers serving within the Group.
The Parent Company’s management believes that such transactions were completed at
market rates. The total value of such transactions was not, in any case, significant in relation
to the Group’s total value of production. No Director, Manager, or Shareholder is a debtor
of the Group.
Management of financial risks. The Group has always paid special attention to financial
risk management by constantly monitoring its exposures and managing them by means of
derivative instruments.
Exposure to exchange risk is marginal and almost totally concentrated in the US dollar,
Japanese yen, British pound and Swiss franc; at the end of 2004, such exposure was
substantially neutralized by Outrights, Currency Swaps, Non Deliverable Forwards and
Collars [“zero cost”] for:
Currency to sell Currency to buy
[in millions] Currency Euro Currency Euro
US dollar 159 124 116 87
Japanese yen 49,672 368 33,300 247
British pound 35 51 2 2
Swiss franc 50 33 1 1
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During 2004, the Group did not use any derivative instruments that involved collecting or
paying premiums.
Under the Group’s guidelines, its exposure to exchange risk is split into:
_ exposure to economic exchange risk: represented by the sum of monetary flows [receipts
and payments in the same currency are netted] in all currencies other than the “functional
currency”. Risk exposure arises as soon as the price lists for collections are defined [each
year being divided into two main collections], which takes place approximately 15 months
prior to the time when cash will be received: the prices in foreign currency applied to the
budget volumes for each item are converted at an exchange rate [known as the “target rate”]
to calculate a budgeted result that the hedging policy has to ensure;
_ exposure to exchange translation risk: on the net investment made by Benetton Group
S.p.A. in foreign Group companies. Each variation in the exchange rate generates a new
value for the net amount that the Parent Company has invested in Group companies
located outside of the euro-zone. The “translation differences” that arise in such cases
represent gains or losses that have a cash impact when there is a distribution of dividends
or if the foreign subsidiary is liquidated or sold off; these differences do not flow into the
statement of income, but are a direct adjustment to Group Shareholders’ equity.
In the same way as the exposure to exchange risk, exposure to interest risk is also
monitored on an ongoing basis and managed by way of derivative instruments. At the end
of the year, the risk exposure on the liabilities side [essentially a floating-rate bond loan with
maturity in 2005 for 300 million euro and a floating-rate syndicated loan with maturity in
2007 for 500 million euro] is partially hedged by interest rate swaps for a notional value of
240 million euro, taken out mostly in previous years of which 190 million will mature in 2005.
The offsetting asset risk exposure is controlled by a policy, approved by the Parent Company
Board of Directors in July 2003. The policy requires that investment instruments be bank
deposits, monetary funds or short-term bonds and fixed or variable rate bonds with
durations under three years. These instruments have to have an issuer rating of not less
than “A-“ from S&P or Fitch or “A3” from Moody’s. Moreover, in order to avoid an excessive
concentration of risk in a single issuer in the case of issuers with a rating of less than “AA”
[or equivalent], the maximum amount that can be invested must not exceed 10% of the
Group’s total investment of liquid funds up to a maximum of 20 million euro.
Privacy and the protection of personal data. As early as 2000, the Company adopted the
Security Planning Document [SPD] envisaged by the legislation then in force. This concerned the
processing by IT systems of information considered “sensitive” or “judicial”.
Legislative Decree 196 of June 30, 2003, partially amending the previous regulations, provides
for adoption of the new minimum security measures and compliance with reference to the same
data by December 31, 2005 [date in the latest extension by Decree Law 314 of December 30,
2004, article 6-bis].
The Company updated its SPD as of 2004 and will again update it in compliance with the new
rules by December 31, 2005.
All Group companies have brought themselves into line with the data security model adopted
by the Parent Company.

Directors. Parent Company Directors as of December 31, 2004 are as follows:
Name and surname Date of birth Appointed Office
Luciano Benetton 05.13.1935 1978 Chairman
Carlo Benetton 12.26.1943 1978 Deputy Chairman
Silvano Cassano 12.18.1956 2003 Managing Director
Giuliana Benetton 07.08.1937 1978 Director
Gilberto Benetton 06.19.1941 1978 Director
Alessandro Benetton 03.02.1964 1998 Director
Gianni Mion 09.06.1943 1990 Director
Sergio De Simoi 05.23.1945 2003 Director
Ulrich Weiss 06.03.1936 1997 Director
Reginald Bartholomew 02.17.1936 1999 Director
Luigi Arturo Bianchi 06.03.1958 2000 Director
Luciano Benetton, Gilberto Benetton, Carlo Benetton and Giuliana Benetton are brothers
and sister; Alessandro Benetton is the son of Luciano Benetton.
Directors’ fees due to members of the Board of Benetton Group S.p.A. totaled 4,927
thousand euro in 2004.
Principal organizational and corporate changes. The branches of Bencom S.r.l. in Spain,
France and Great Britain became operational in January 2004. Through these branches,
Bencom S.r.l. directly manages a certain number of Benetton stores in the above-mentioned
countries, previously controlled by Benetton Retail Spain S.L., Benetton Retail France S.A.S.
and Benetton Retail [1988] Ltd., respectively. During June, a branch was set up in Belgium,
operational from August 1, to purchase and manage, also by rental to third parties, businesses
operating Benetton stores.
On February 17, 2004 Benfin S.p.A. bought from third parties, for 15 million euro, 15% of the
Olimpias S.p.A. share capital, of which it previously held 85%. This company produces, mainly
for Group companies, textile products and, in particular, fabrics, knitted fabrics, yarns, woven
and printed fabrics, as well as acting as a dye house and laundry. With effect from December
1, 2004, Olimpias S.p.A. was merged by incorporation into the parent company Benfin S.p.A.,
which changed its name at the same time to Olimpias S.p.A. The operation is part of and is
based on the same rationale as a more general reorganization of the Group, largely completed
during the 2003 financial year.
During May, Benetton International S.A. [formerly Benetton Retail International S.A.] sold
to Benetton Holding International N.V. S.A. [formerly Benetton International N.V. S.A.] its
holding in Benetton Asia Pacific Ltd., a company operating in Hong Kong in retail activities and
services for other Group companies.
The German subsidiary New Ben GmbH purchased, for a price of 4 million euro, the entire
shareholding in Mari Textilhandels GmbH, a German company owning around 30 stores
engaged in the sale of Group-branded products in various German regions. This purchase
was effective on July 1, 2004; from the same date, Mari Textilhandels GmbH was merged by
incorporation into New Ben GmbH.
Continuing with the same process of simplification of the corporate structure, with effect
from September 1, 2004, I.M.I. S.r.l. was merged by incorporation into the parent company
Bencom S.r.l.
In September 2004, Benetton Group S.p.A. sold its holding of 10% of the share capital of
Tecnica S.p.A. to third parties.
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During its July 15 meeting, Benetton Group S.p.A. Board of Directors approved a stock option
plan for Group top management. Details of this operation are shown in the paragraph “Stock
option plan”.
The corporate restructuring plan in Spain and Portugal was completed with the transfer of
the shareholding in Benetton Real Estate Spain S.L. [formerly Benetton Textil Spain S.L.] from
Benetton Holding International N.V. S.A. to Benetton Realty Spain S.L.
Benetton Realty Spain S.L. sold its shareholding in Benetton Realty Portugal Imobiliaria S.A. to
Benetton Real Estate International S.A.; Benetton Real Estate Spain S.L. sold its shareholding
in Benetton Têxtil Confecção de Têxteis S.A. to Benetton Manufacturing Holding N.V.
The corporate restructuring plan continued in France with the transfer of the shareholding
in Benetton France Commercial S.A.S. [formerly Benetton Retail France S.A.S.] by Benetton
International S.A. to Benetton France S.à r.l. [formerly Benetton France Trading S.à r.l.].
Benetton France Commercial S.A.S. sold to third parties the entire shareholding in the French
company L’Apollinaire S.n.c., owner of a sales business.
In December, the purchase of the remaining 50% of the share capital of DCM Benetton
India Ltd. from third parties by Benetton Holding International N.V. S.A. was finalized and
the liquidations of Benetton Sportsystem Taiwan Ltd. and Benetton [Far East] Ltd. were
completed.
Significant events since year-end. No significant events occurred after year-end.
Outlook for 2005. The economic environment in the principal European markets, especially
in Italy and Germany which represent 55% of Group revenues, continues to be disappointing.
Consumers are spending very cautiously and are placing great emphasis on the quality-price
ratio even more than in the past. Deflationary pressures in the market are generated both by
economic uncertainty and by the ending of the multifiber agreement for the Chinese market.
In this situation, it is difficult to speculate on an economic recovery in the short-term.
The Group has established an important policy of incentives to the network of partners, in
line with the business model, with the objective of placing them in a condition to increase their
investment capacity, to open new stores and to renew the existing ones, as well as to increase
their competitive capacity in terms of price to the final customer.
This policy of incentives to the network has been made possible by the strategic focus on
efficiency actions, optimization of production and organization systems and strict containment
of administrative costs.
Expected revenues for 2005 are between 1,620 and 1,650 million euro, with EBIT around
9.5-10% and net income around 6%.
In 2005, the level of investments will amount to around 130-150 million euro, leading to a net
financial position of around 400 million euro and free cash flow of around 100 million euro.

Group consolidated results
Consolidated statement of income. The highlights of the Group’s statement of income for
2004 are presented below; they are based on the statement of income with the reclassified
revenues and cost of sales used for internal reporting purposes [percentage changes are
calculated on the precise values].
[millions of euro] 2004 % 2003 % Change %
Revenues 1,686 100.0 1,859 100.0 [173] [9.3]
Cost of sales [929] [55.1] [1,049] [56.4] 120 [11.4]
Gross operating income 757 44.9 810 43.6 [53] [6.5]
Variable selling costs [104] [6.2] [114] [6.2] 10 [9.4]
Contribution margin 653 38.7 696 37.4 [43] [6.0]
General and administrative expenses [436] [25.8] [464] [24.9] 28 [6.0]
Income from operations 217 12.9 232 12.5 [15] [6.2]
Foreign currency gain, net - - 10 0.5 [10] n.s.
Net financial expenses [23] [1.4] [32] [1.7] 9 [25.0]
Ordinary income 194 11.5 210 11.3 [16] [7.6]
Other expenses [3] [0.2] [7] [0.4] 4 [57.1]
Non-recurring items [26] [1.5] [38] [2.0] 12 [31.6]
Income before taxes 165 9.8 165 8.9 - [0.6]
Income taxes [42] [2.5] [56] [3.0] 14 [26.0]
Minority interests income - - [1] [0.1] 1 n.s.
Net income for the year 123 7.3 108 5.8 15 14.1
In the year, the Group generated revenues of 1,686 million euro compared with 1,859 million
the previous year, an overall decrease of 9.3%. This is the combined result of two main
factors: sale of the sports equipment business, completed in the first half of 2003,
and persistent unfavorable trends in the principal foreign currency exchange rates, especially
the dollar and the yen. The reduction in sales due to the business sold was around 89 million
euro, while the exchange impact on total consolidated revenues was 17 million euro; without
this impact and excluding the sports equipment business, the contraction in sales is reduced
to 3.6% compared with 2003, in a very weak consumer market, especially in Europe.
Casual sector sales, net of the exchange impact, showed a reduction of 3.7% with constant
volumes.
In the sports sector, the net reduction in revenues was 84 million euro due mainly to the
impact of sale of the equipment business, partially compensated by sportswear which
increased by 5 million euro.
Sales in the manufacturing sector reduced by around 14 million euro, equivalent to 11.5%,
due to the contraction of demand in the market for fabrics and yarns.
Cost of sales decreased both in absolute terms, by 120 million euro, and as a percentage of
revenues, from 56.4% to 55.1%. This improvement is attributable to greater production and
logistics efficiency in the casual sector, sale of the sports equipment business, with an impact
of 57 million euro and a positive exchange impact of 8 million euro.
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Gross operating income was 757 million euro compared with 810 million in 2003,
representing 44.9% of sales compared with 43.6% in the previous year. The reduction in
absolute terms was 53 million euro, of which 32 million euro was due to sale of the sports
equipment business and 17 million euro related to the casual sector, where, however, it
increased from 46.7% to 48.0% of revenues. The manufacturing sector went down both in
absolute terms and as a percentage of revenues.
Variable selling costs were 6.2% of revenues, in line with the previous year.
General and administrative costs were 436 million euro compared with 464 million euro in
2003, with a reduction of 28 million euro, and 25.8% of net revenues compared with 24.9%
in the previous year.
The reduction in absolute terms was mainly due to the business sold and to strong
rationalization and cost containment actions carried out in 2004; these latter almost entirely
compensated for the natural growth of costs for development of retail activities.
In the casual sector, general and administrative costs increased in absolute terms by 4 million
euro, increasing from 26.1% to 27.8% of net revenues; among administrative costs, personnel
costs and other operating costs went up by 25 million euro, due to the greater number of
directly operated stores; advertising and sponsorship costs and provisions reduced by 8 and
13 million euro respectively.
Income from operations was 217 million euro compared with 232 million in 2003, improving
from 12.5% to 12.9% of revenues. The reduction in absolute terms of 15 million euro was mainly
due to the casual sector, where this was 14.0% of revenues against 14.4% in the previous year.
The sports sector’s income from operations was 1 million euro compared with a loss in the
previous year of around 2 million. This improvement was due to the impact of selling the
sports equipment business.
Foreign exchange management tended towards breakeven compared with the 10 million euro
net gains of the previous year, influenced by movements of the principal foreign currencies.
Net financial expenses, of 23 million euro, reduced in absolute terms by 9 million euro, from
1.7% to 1.4% of net revenues; this improvement was due to both the reduction in the average
financial position by 100 million euro and the reduced cost of borrowing.
Ordinary income was 194 million euro, compared with 210 million euro in the previous year,
improving from 11.3% to 11.5% of revenues.
Net other and non-recurring expenses were 29 million euro and mainly comprised adjustment
to current values of some assets in England, France and the United States relating to the
sales network and gains from the sale of some property in the third quarter. The significant
reduction, compared with 45 million in 2003, was due to expenses of Italian companies for
the tax amnesty included in the amount for the previous year.
Net income for the year was 123 million euro compared with 108 million euro in 2003,
representing 7.3% of revenues compared with 5.8%.

Revenues by geographical area are as follows:
[millions of euro] 2004 % 2003 % Change %
Europe 1,435 85.1 1,546 83.2 [111] [7.2]
The Americas 72 4.3 113 6.1 [41] [36.3]
Asia 174 10.3 190 10.2 [16] [8.4]
Rest of the world 5 0.3 10 0.5 [5] [50.0]
Total 1,686 100.0 1,859 100.0 [173] [9.3]
Europe continues to be the Group’s main reference market. The two years are not directly
comparable because of the exchange rate impact of the US dollar and the Japanese yen and
the impact of selling the sports equipment business.
Performance by activity. The Group’s activities are traditionally divided into three sectors
to provide the basis for effective administration and adequate decision-making by company
management, and to supply accurate and relevant information about company performance
to financial investors.
The business sectors are as follows:
_ casual, representing the Benetton brands [United Colors of Benetton, Undercolors and
Sisley], which also incorporates figures for the retail business, as well as complementary
products, such as accessories and footwear;
_ sportswear and equipment, developed with the Playlife and Killer Loop brands;
it also includes sales of equipment relating to production for third parties by a Group
manufacturing company. The 2003 comparison period still includes sales of sports
equipment carrying the Nordica, Rollerblade and Prince brands;
_ manufacturing and other, composed mainly of sales of raw materials, semi-finished products
and industrial services as well as of revenues and expenses from real estate activity.
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Results of the Casual sector
[millions of euro] 2004 % 2003 % Change %
Sector total revenues 1,504 100.0 1,579 100.0 [75] [4.7]
Cost of sales [783] [52.0] [841] [53.3] 58 [6.9]
Gross operating income 721 48.0 738 46.7 [17] [2.2]
Selling costs [93] [6.2] [98] [6.2] 5 5.1
Contribution margin 628 41.8 640 40.5 [12] [1.7]
General and administrative costs [417] [27.8] [413] [26.1] [4] [1.2]
Income from operations 211 14.0 227 14.4 [16] [7.0]
Sector revenues were 1,504 million euro compared with 1,579 million euro in 2003 with
a reduction of 4.7%. Without the exchange effect, described in the previous section, the
reduction in sales goes down to 3.7%. Sales volumes were substantially unchanged. Cost of
sales reduced by 6.9%, improving from 53.3% to 52.0% of net revenues and gross operating
income increased from 46.7% to 48.0%, due to even more efficient rationalization of the
manufacturing process.
Selling costs remained stable as a percentage of sales, whereas general and administrative
expenses felt the impact of actions undertaken to develop the sales network.
Income from operations was 211 million euro, representing 14.0% of net revenues.
Results of the Sportswear and equipment sector
[millions of euro] 2004 % 2003 % Change %
Sector total revenues 75 100.0 159 100.0 [84] [52.8]
Cost of sales [56] [75.3] [111] [69.7] 55 [49.0]
Gross operating income 19 24.7 48 30.3 [29] [61.6]
Selling costs [3] [3.9] [8] [5.0] 5 [62.9]
Contribution margin 16 20.8 40 25.3 [24] [61.4]
General and administrative costs [15] [19.7] [42] [27.1] 27 [65.8]
Income from operations 1 1.1 [2] [1.8] 3 n.s.
Sale of the sports equipment business was completed in the first half of 2003 and around
89 million euro of the reduction in sales revenues in 2004 was due to this disposal, while
sportswear sales at 45 million euro increased by around 12%.
Cost of sales was 55 million euro lower following sale of the sports equipment sector and
increased from 69.7% to 75.3% of net revenues. Selling costs went from 5.0% to 3.9% of
revenues.
The improvement from operations, from a loss of 2 million euro to a profit of 1 million euro,
was due to savings in general and administrative costs relating to both sportswear and the
business sold.

Results of the Manufacturing and other sector
[millions of euro] 2004 % 2003 % Change %
Sector total revenues 107 100.0 121 100.0 [14] [11.5]
Cost of sales [90] [84.2] [97] [80.2] 7 [7.2]
Gross operating income 17 15.8 24 19.8 [7] [29.2]
Selling costs [8] [6.9] [8] [6.8] - [8.7]
Contribution margin 9 8.9 16 13.0 [7] [39.8]
General and administrative costs [4] [4.3] [9] [7.2] 5 [47.1]
Income from operations 5 4.6 7 5.8 [2] [30.6]
Manufacturing sector sales went down by 11.5%, due to contraction of the fabrics and yarns
market, while the cost of sales increased to 84.2% of revenues compared with 80.2% in the
previous year. This resulted in a reduction in gross operating income both in absolute terms
and as a percentage of sales. Selling costs remained substantially in line with the previous year,
while general and administrative expenses reduced both in absolute terms and as a percentage
of sales, partially compensating for the higher cost of sales and leading to income from
operations of 4.6% of revenues compared with 5.8% in 2003.
Financial situation - highlights. The more important elements of the balance sheet, with
comparative figures as of December 31, 2003, are as follows:
[millions of euro] 12.31.2004 12.31.2003 Change
Working capital 688 729 [41]
Assets due to be sold 8 8 -
Total capital employed 1,668 1,655 13
Net financial position 431 468 [37]
Shareholders’ equity 1,230 1,174 56
Minority interests 7 13 [6]
Compared with the previous year, working capital reduced by 41 million euro, mainly due
to a reduction in trade receivables, partially offset by the increase in inventories and other
receivables. Assets due to be sold in 2004 relate to a factory in the manufacturing sector, while
those in 2003 related to the sports equipment sector.
Apart from what has already been said, the change in net capital employed was also due to the
combined effect of the following factors:
_ additions to tangible and intangible fixed assets as a result of investments totaling
152 million euro;
_ depreciation/amortization, write-downs and disposals of 100,14 and 62 million euro
respectively;
_ change in operational reserves of 10 million euro;
_ increase in tax receivables of 99 million euro, relating essentially to the corporate business
transfer operation at the end of 2003, the impact of which on net capital employed emerged
during 2004;
_ decrease in financial fixed assets of 41 million euro.
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D I R EC TO R S’ R E P O RT
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The net financial position was 431 million euro, a decrease of 37 million euro compared with
the previous year, broken down as follows:
[millions of euro] 12.31.2004 12.31.2003 Change
Current financial assets:
_ Italian government securities and monetary and bond funds 118 27 91
_ bank deposits 141 207 [66]
_ cash and ordinary current accounts 119 118 1
_ other short-term financial receivables 16 17 [1]
Total current financial assets 394 369 25
Medium-term financial receivables 29 31 [2]
Total financial assets 423 400 23
Current financial liabilities:
_ bond loan [300] - [300]
_ short-term financial payables [25] [35] 10
_ current portion of medium-term debt [1] [2] 1
_ current portion of amounts due to leasing companies [6] [5] [1]
Total current financial liabilities [332] [42] [290]
Medium-term financial payables:
_ bond loan - [300] 300
_ syndicated loan [500] [500] -
_ other medium-term loans [4] [4] -
_ due to leasing companies [18] [22] 4
Total medium-term financial payables [522] [826] 304
Total financial liabilities [854] [868] 14
Net financial position [431] [468] 37
Net short-term financial position 62 327 [265]
Net medium-term financial position [493] [795] 302
Net financial position [431] [468] 37
To provide better support for the cyclical nature of the Group business and meet future
commitments, on March 4, 2005, the Board of Directors authorized the management to
negotiate a revolving line of credit for a maximum amount of 500 million euro and with a
maximum duration of 5 years.
These financial resources, of 394 million euro at the end of 2004, will enable to meet the
maturity date in July 2005 of the 300 million euro bond loan, which places limitations on
giving collateral security for new loans but does not require observance of any financial ratio
[“financial covenants”].
The syndicated loan of 500 million euro, maturing in July 2007, provides for compliance with two
financial ratios that have to be calculated every six months on the consolidated figures, namely:
_ minimum ratio between EBITD [earnings before interest, tax and depreciation] and net
financial charges of 2.5 times;
_ maximum ratio between the net financial position and shareholders’ equity of 1.
Moreover, there are limits on significant disposals of activities and on the granting of collateral
security for new loans.

Statement of cash flow
[millions of euro] 2004 2003
Cash flow from operating activities 269 252
Net operating investments [69] [126]
Change in financial fixed assets [23] [4]
Free cash flow 177 122
Payment of dividends [69] [64]
Payment of substitute tax [125] -
Disposal of the sports equipment sector 50 81
Net financial surplus 33 139
Free cash flow improved significantly by 55 million euro. Payment of substitute tax associated
with the corporate reorganization had a significant impact.
The net proceeds from sale of the sports equipment business, of 50 million euro, are made up
as follows:
_ sale of the 10% interest in Tecnica S.p.A. for 15 million euro;
_ receipt of a restricted deposit [escrow account] of 27 million euro;
_ sale of a property by the American subsidiary for 8 million euro.
For further information of an economic and financial nature, see the notes to the consolidated
financial statements.
Quarterly financial data
[millions of euro] 1st quarter 2nd quarter 3rd quarter 4th quarter
2004 quarters
Net revenues 381 472 389 444
Gross operating income 171 202 176 208
Net income 28 39 33 23
Profit per share [euro]
_ basic earnings per share 0.15 0.21 0.18 0.13
2003 quarters
Net revenues 444 525 413 477
Gross operating income 192 223 182 213
Net income 25 25 26 32
Profit per share [euro]
_ basic earning per share 0.14 0.14 0.14 0.18
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Gross operating income and income from operations [millions of euro]
Gross operating income
Margine lordo industriale e risultato operativo
Income from operations
Income before taxes and net income/[loss] [millions of euro]
Income before taxes
Net income/[loss]
757
217
810
232
868
243
909
286
880
309
165
123
165
108
49
[10]
243
148
346
243
2004
2003
2002
2001
2000
2004
2003
2002
2001
2000

Sources and uses [millions of euro] 2004 consolidated balance sheet
structure [in %]
Disposal of the sport
equipment sector 81
Cash flow
from operating
activities 252
2003
Sources
Uses
Net operating
investments 126
Payment of
dividends 64
Change in financial
fixed assets 4
Net financial
surplus 139
Disposal of the sport
equipment sector 50
Cash flow
from operating
activities 269
2004
Sources
Uses
Net operating
investments 69
Payment of
substitute tax 125
Payment of
dividends 69
Change in financial
fixed assets 23
Net financial
surplus 33
Current assets
60.1%
Fixed assets
39.9%
2004
Assets
Liabilities
Current liabilities
27.6%
Medium/long-term
liabilities 25.3%
Shareholders’
equity 47.1%
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Impact of introducing IAS/IFRS
Development of the relative regulatory framework. European Community [EC] regulation
1606/2002, implemented by the Italian legislature through Law 306/2003, requires companies
quoted in regulated European markets to adopt international accounting standards [IAS/IFRS]
in the preparation of consolidated financial statements as from January 1, 2005. The Italian
government subsequently approved, on February 25, 2005, the Legislative Decree to activate
the options provided by article 5 of EC regulation 1606/2002, which made application of
IAS/IFRS to financial statements of quoted companies optional for the 2005 financial year and
obligatory as from the 2006 financial year. For the 2005 financial year, the Benetton Group has
chosen to apply IAS/IFRS to the consolidated financial statements only.
International accounting principles and related interpretations existing on September 14,
2002, with the exception of IAS 32 and 39, were ratified by the European Commission by the
adoption of Regulation 1725 of September 29, 2003. During 2004, the European Commission
adopted a series of Regulations to ratify international accounting standards published and
revised subsequently. In particular, the following Regulations were issued:
_ no. 707 of April 6, 2004 which ratified IFRS 1 “First-time adoption of International Financial
Reporting Standards”;
_ no. 2086 of November 19, 2004 which ratified IAS 39, with some limitations;
_ nos. 2236, 2237 and 2238 of December 29, 2004 which ratified IAS 32, IFRIC 1, other
standards revised by the IASB and new IFRS issued in March 2004;
_ no. 211 of February 4, 2005 which ratified IFRS 2.
The version of IAS 39 approved by EC Regulation 2086 differs from the text approved by the
IASB; the Benetton Group will apply IAS 39 in the version approved by the IASB.
IAS/IFRS conversion process for the Benetton Group. The first annual financial statements
of the Benetton Group that will be prepared in accordance with international accounting
standards will be those for the year ending December 31, 2005.
The Group intends to adopt IAS/IFRS as from the consolidated half-year report to June 30,
2005.
The transition date, namely the opening date of the financial year prior to that of first-time
adoption of IAS/IFRS, is January 1, 2004. The consolidated balance sheet at that date is
required to be adjusted on the basis of international accounting standards as if they had always
applied, with the exception of obligatory and optional concessions set out in IFRS 1.
For the purposes of the adjustment of the opening balance sheet at the transition date and of
consolidated financial statements to December 31, 2004, the Benetton Group will adopt the
following options stated for in IAS/IFRS for preparing the financial statements:
_ in the balance sheet, assets and liabilities are classified according the criterion which divides
categories between “current” and “non-current”;
_ the statement of income is classified based on the nature of costs.
With reference to the optional exemptions set out in IFRS 1, the following choices were made.
Valuation of real estate, plant and machinery and intangible assets - IFRS 1 allows the
assumption of fair value or, if certain requirements are met, revalued cost, such as
replacement cost of original depreciated/amortized cost. The Benetton Group is not making
use of this exemption, since it has adopted the criterion of depreciated/amortized historic
cost for the valuation of tangible and intangible fixed assets.

Reserve for net exchange differences arising from the conversion of the financial statements
of foreign shareholdings - IAS 21 “Effects of changes in foreign exchange rates” states that
the differences arising from conversion of the financial statements of a foreign consolidated
company must be classified as a separate item in Shareholders’ equity, which is transferred
to the statement of income when the company is sold. The Group has adopted the facility
granted by IFRS 1 to apply IAS 21 on a prospective basis, assuming that, at the date of
transition to IAS/IFRS, the translation reserve is zero.
Business combinations - IFRS 1 states that, at the transition date, the choice can be made not
to apply IFRS 3 “Business Combinations” retroactively to company combinations which took
place before the date of transition to IAS/IFRS. The Benetton Group intends to make use of
this exemption and adopt IFRS 3 on a prospective basis, as from January 1, 2004, even though
the effects of its application at the transition date would be minimal.
Compound financial instruments - IAS 32 “Financial instruments: disclosure and presentation”
states that, where there are compound financial instruments, the liability and shareholders’
equity components must be separated. IFRS 1 allows the non-separation of the two
components if the liability element no longer exists at the transition date. The Benetton Group
does not hold any compound financial instruments.
Financial instruments accounted for in accordance with previous standards - IAS 32 and 39
“Financial instruments: recognition and measurement” applies to annual financial statements
of financial years commencing as from January 1, 2005, however its early adoption is
encouraged and the Benetton Group intends to apply this standard on a prospective basis
as from January 1, 2004.
Considering the designation of financial instruments as “instruments valued at fair value with
variations attributed directly to the statement of income” or as “available for sale” - IAS 39
allows entry of a financial instrument at the time of its first entry either in the category
“financial assets and liabilities valued at fair value with changes attributed directly to the
statement of income” or in the category “assets available for sale”. IFRS 1 allows these
designations to be made at the date of transition to IAS/IFRS and the Benetton Group is
making use of this exemption.
Derecognition of financial assets and liabilities - IAS 39 requires recognition in the opening
balance sheet at January 1, 2004 of financial assets and liabilities, other than derivatives, which
were previously written off following application of previous accounting principles. However,
IFRS 1 allows application of the principle of “derecognition” on a prospective basis and
therefore applicable to financial assets and liabilities, not consisting of derivatives, purchased
after the transition date. The Benetton Group does not have any cases which would lead to
adoption of the exemption in question.
Share-based payments - IFRS 2 “Share-based payments” applies to annual financial statements
of years commencing as from January 1, 2005, however its early adoption is encouraged and
the Benetton Group intends to apply the standard on a prospective basis as from the 2004
financial year.
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D I R EC TO R S’ R E P O RT
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Relative to accounting treatments allowed by IAS/IFRS, the Benetton Group has adopted the
options described below.
Concerning tangible and intangible assets, IAS/IFRS provide that, subsequent to acquisition,
tangible and intangible assets may be valued at cost or fair value. The Benetton Group has
adopted the cost option.
IAS 2 allows valuation of inventories according to the criterion of weighted average cost or
FIFO. The Benetton Group has opted for the criterion of weighted average cost, in line
with what was also applied in previous financial statements prepared on the basis of Italian
accounting principles.
Adjustments to shareholders’ equity at January 1, 2004, now emerging from the application of
IAS/IFRS to the Benetton Group financial statements are summarized below:
write-off of monetary revaluations in accordance with IAS 16 - in the past some categories
of tangible fixed assets were the subject of monetary revaluations as allowed by Italian and
Spanish law. The amount of the revaluation will be written off from the value of the asset,
with an offsetting entry in a reserve in shareholders’ equity;
write-off of start-up and expansion expenses in accordance with IAS 38 - start-up and expansion
expenses will be written off, under Italian accounting principles, such expenses could be
capitalized, however, under IAS/IFRS, qualify for recognition according to IAS 38;
valuation of employee termination indemnities [TFR] in accordance with IAS 19 - Italian
accounting principles require the liability for TFR to be shown at nominal value, calculated
according to the provisions of the Italian Civil Code, whereas, according to IAS/IFRS, the
amount of TFR falls within the category of defined benefit plans as provided in IAS 19 and
subject to actuarial valuation. The Benetton Group has instructed an actuary to value the TFR
liability at the transition date;
accounting for leases according to IAS 17 - for the purposes of IAS 17, both lease income and
expense must be registered in constant periodic amounts over the duration of the contract.
The Benetton Group has entered into lease contracts in the USA and UK with increasing
lease payments and, for the purposes of determining the income or charge for each period in
accordance with IAS/IFRS, it is necessary to equalize these installments into constant amounts;
fair value of exchange rate hedges in accordance with IAS 39 - the impact of mark to
market valuation of exchange rate hedging instruments for future sales will be included in
shareholders’ equity, whereas in accordance with accounting principles applied to date, they
have been attributed to the statement of income;
fair value of derivative instruments on interest rates in accordance with IAS 39 - the Benetton
Group holds Interest Rate Swaps [IRS] to manage interest variation risks. Under Italian
accounting principles, IRS satisfy the requirements of hedging instruments and therefore
the difference between interest paid and that received is attributed directly to the relevant
statement of income. For the purposes of IAS/IFRS, the derivative instruments in question do
not satisfy all the requirements of IAS 39 for consideration as hedges and therefore will be
valued at fair value.

Further differences emerging from the application of IAS/IFRS to the Benetton Group financial
statements but which do not have any impact on the reconciliation at January 1, 2004 are
summarized below:
leasehold improvements in accordance with IAS 16 - leasehold improvements will be reclassified
from intangible to tangible fixed assets and depreciated over their estimated useful life or the
duration of the lease contract to which they refer, if less;
stock options in accordance with IFRS 2 - IFRS 2 considers stock options to be in the category
of “share-based payments” and requires them to be valued at fair value at the time of their
assignment, showing a cost in the statement of income offset by an increase in shareholders’
equity reserves;
impairment test in accordance with IAS 36 - IAS/IFRS require an impairment procedure for
company assets to ensure that they are not included in balance sheet assets at a value higher
than is recoverable. The Benetton Group is proceeding with the identification of Cash-
Generating Units [CGUs] and establishing guidelines to allocate values and flows to these
CGUs, as well as parameters to be used in the valuation process;
available-for-sale financial assets - investments of liquidity in securities will be reclassified into
the category foreseen in IAS 39 “Available-for-sale financial assets”; any losses or gains arising
from comparison with market prices at the various accounting period-ends will be attributed
to shareholders’ equity until the actual sale of these financial assets.
IFRS 3 eliminates the concept of amortization of “Goodwill”; this requirement will have
a limited impact on the Benetton Group financial statements, since the amounts currently
in “Goodwill” in the consolidated financial statements mainly refer to payments for surrender
of leases for acquisitions on a lease basis of properties for use as stores. These lease surrender
payments will be amortized over the duration of the lease contract with the exception of
French and Belgian “fonds de commerce”, amortized over 20 years.
D I R EC TO R S’ R E P O RT
45

Benetton Group 2004 consolidated financial statements and related notes

C O N SO LI DATE D F I NANC IAL STATE M E NTS
48
Consolidated balance sheet reclassified according to financial criteria [thousands of euro]
Assets 12.31.2004 12.31.2003 notes
Current assets
Cash and banks 260,196 324,835 11
Marketable securities 117,879 27,289 10
Differentials on forward transactions 6,857 10,000 10
Financial receivables 9,167 7,298 3
394,099 369,422
Accounts receivable 5, 8
Trade receivables 755,082 848,508
Other receivables 249,328 297,220
less - Reserve for doubtful accounts [97,642] [95,870]
906,768 1,049,858
Assets due to be sold 7,840 8,088 9
Inventories 255,436 233,736 4
Accrued income and prepaid expenses 13,367 15,842 12
276,643 257,666
Total current assets 1,577,510 1,676,946
Financial fixed assets 3
Equity investments 5,116 20,514
Securities held as fixed assets 223 9
Guarantee deposits 16,715 15,832
Medium/long-term financial receivables 28,273 30,615
Other non-current receivables 44,436 8,662
Total financial fixed assets 94,763 75,632
Tangible fixed assets 2
Real estate 703,449 641,966
Plant, machinery and equipment 305,636 327,409
Office furniture, furnishings and electronic equipment 112,655 100,269
Vehicles and aircraft 22,366 22,817
Construction in progress and advances for tangible fixed assets 3,724 17,019
Finance leases 13,259 13,913
less - Accumulated depreciation [419,293] [409,553]
Total tangible fixed assets 741,796 713,840
Intangible fixed assets 1
Licenses, trademarks and industrial patents 25,041 28,225
Deferred charges 184,392 202,800
Total intangible fixed assets 209,433 231,025
Total assets 2,623,502 2,697,443

Liabilities and Shareholders’ equity 12.31.2004 12.31.2003 notes
Current liabilities
Due to banks 19,924 33,879 18
Bonds 300,000 - 17
Short-term loans 4,985 1,339 19
Current portion of medium/long-term loans 1,101 1,567 18
Current portion of lease financing 6,007 4,977 19
Accounts payables 284,011 331,563 20
Other payables, accrued expenses and deferred income 93,422 91,364 23, 24
Reserve for income taxes 14,113 126,514 22
Total current liabilities 723,563 591,203
Medium/long-term liabilities
Bonds - 300,000 17
Medium/long-term loans net of current portion 501,180 502,269 18
Other medium/long-term liabilities 41,343 3,330 21, 23
Lease financing 17,748 21,834 19
Reserve for employee termination indemnities 51,518 49,774 16
Other reserves 50,990 42,373 15
Total medium/long-term liabilities 662,779 919,580
Minority interests in consolidated subsidiaries 6,840 12,799 14
Shareholders’ equity 13
Share Capital 236,026 236,026
Additional paid-in capital 56,574 56,574
Surplus from monetary revaluation of assets 22,058 22,058
Other reserves and retained earnings 790,211 762,986
Translation differences 2,377 [11,657]
Net income/[loss] for the year 123,074 107,874
Total Shareholders’ equity 1,230,320 1,173,861
Total liabilities and Shareholders’ equity 2,623,502 2,697,443
C O N SO LI DATE D F I NANC IAL STATE M E NTS
49

C O N SO LI DATE D F I NANC IAL STATE M E NTS
50
Consolidated statement of income with revenues and cost of sales reclassified [thousands of euro]
2004 2003 notes
Revenues 1,686,351 1,858,983 26
Cost of sales
Material and net change in inventories 438,992 528,315 29
Payroll and related costs 86,977 90,786 32
Subcontract work 340,217 364,291 30
Industrial depreciation and amortization 21,118 24,075 33
Other manufacturing costs 42,046 41,731
929,350 1,049,198
Gross operating income 757,001 809,785
Selling, general and administrative expenses
Payroll and related costs 125,181 121,424 32
Distribution and transport 29,988 31,687 30
Sales commission 73,573 82,622 30
Advertising and promotion 53,714 69,477 30
Depreciation and amortization 78,447 79,178 33
Other expenses 178,894 193,818 28, 30, 31, 34
539,797 578,206
Income from operations 217,204 231,579
Other income/[expenses] 33, 34, 36-40
Foreign currency gain/[loss], net 165 9,652
Interest income 21,816 28,780
Interest expenses [45,402] [60,213]
Other income/[expenses], net [29,448] [44,480]
[52,869] [66,261]
Income before taxes and minority interests 164,335 165,318
Income taxes 41,754 56,399 41
Income before minority interests 122,581 108,919
Minority interests [income]/loss 493 [1,045]
Net income for the year 123,074 107,874

C O N SO LI DATE D F I NANC IAL STATE M E NTS
52
Consolidated balance sheet - Assets [thousands of euro]
12.31.2004 12.31.2003 notes
A Receivable from Shareholders for payments not yet due - -
B Fixed assets
I Intangible fixed assets 1
1 start-up and expansion expenses 3,685 7,361
3 industrial patents and intellectual property rights 1,099 1,491
4 concessions, licenses, trademarks and similar rights 23,942 26,734
5 goodwill and consolidation differences 90,285 90,078
6 assets under construction and advances to suppliers 222 206
7 other intangible fixed assets 90,200 105,155
Total intangible fixed assets 209,433 231,025
II Tangible fixed assets 2
1 real estate 590,184 540,099
2 plant and machinery 79,498 87,343
3 industrial and commercial equipment 884 1,206
4 other assets 67,506 68,173
5 assets under construction and advances to suppliers 3,724 17,019
Total tangible fixed assets 741,796 713,840
III Financial fixed assets 3
1 equity investments in:
a. subsidiary companies 3,216 3,549
b. associated companies 5 5
d. other companies 1,895 16,960
Total equity investments 5,116 20,514
2 accounts receivable due from:
d. third parties:
_ within 12 months 9,326 34,742
_ beyond 12 months 44,989 46,447
Total accounts receivable 54,315 81,189
3 other securities 223 9
Total financial fixed assets 59,654 101,712
Total fixed assets 1,010,883 1,046,577

12.31.2004 12.31.2003 notes
C Current assets
I Inventories 4
1 raw materials, other materials and consumables 101,559 101,734
2 work in progress and semi-manufactured products 57,558 53,147
4 finished goods and goods for resale 96,099 78,422
5 advances from customers 220 433
Total inventories 255,436 233,736
II Accounts receivable 5
1 trade receivables:
_ within 12 months 657,002 752,153
_ beyond 12 months 3,400 3,581
Total trade receivables 660,402 755,734
2 subsidiary companies - 101
3 associated companies 351 364
4 parent company:
_ within 12 months 405 447
_ beyond 12 months 32,283 -
Total parent company 32,688 447
4bis taxes: 6
_ within 12 months 39,592 26,004
_ beyond 12 months 2,052 2,479
Total taxes 41,644 28,483
4ter deferred tax assets 182,624 202,250 7
5 other receivables: 8
_ within 12 months 26,425 41,061
_ beyond 12 months 6,701 2,602
Total other receivables 33,126 43,663
6 assets due to be sold 7,840 8,088 9
Total accounts receivable 958,675 1,039,130
III Financial assets not held as fixed assets 10
6 other securities 117,879 27,289
7 other financial receivables 209 34
8 differentials on forward transactions
within 12 months 6,857 10,000
Total financial assets not held as fixed assets 124,945 37,323
IV Liquid funds 11
1 bank and post office deposits 200,175 265,024
2 checks 59,594 59,503
3 cash in hand 427 308
Total liquid funds 260,196 324,835
Total current assets 1,599,252 1,635,024
D Accrued income and prepaid expenses 13,367 15,842 12
Total assets 2,623,502 2,697,443
C O N SO LI DATE D F I NANC IAL STATE M E NTS
53

C O N SO LI DATE D F I NANC IAL STATE M E NTS
54
Consolidated balance sheet - Liabilities and Shareholders’ equity [thousands of euro]
12.31.2004 12.31.2003 notes
A Shareholders’ equity 13
I Share Capital 236,026 236,026
II Additional paid-in capital 56,574 56,574
III Revaluation reserves 22,058 22,058
IV Legal reserve 47,210 32,240
VII Other reserves 745,378 719,089
IX Net income for the year 123,074 107,874
Group interest in Shareholders’ equity 1,230,320 1,173,861
Minority interests 6,840 12,799 14
Total Shareholders’ equity 1,237,160 1,186,660
B Reserves for risks and charges 15
2 taxes, including deferred 46 3,039
3 other 50,944 39,334
Total reserves for risks and charges 50,990 42,373
C Reserve for employee termination indemnities 51,518 49,774 16
D Accounts payable
1 bonds: 17
_ within 12 months 300,000 -
_ beyond 12 months - 300,000
Total bonds 300,000 300,000
4 due to banks: 18
_ within 12 months 20,965 35,388
_ beyond 12 months 500,710 501,739
Total due to banks 521,675 537,127
5 due to other lenders: 19
_ within 12 months 9,652 5,835
_ beyond 12 months 18,218 22,364
Total due to other lenders 27,870 28,199
6 advances from customers 1,611 2,715
7 trade payables: 20
_ within 12 months 281,066 317,292
_ beyond 12 months - 101
Total trade payables 281.066 317,393
8 securities issued within 12 months 1,408 1,080
9 due to subsidiaries 2,684 2,630
10 due to associated companies - 5

12.31.2004 12.31.2003 notes
11 due to parent company: 21
_ within 12 months 51 11,005
_ beyond 12 months 18,664 -
Total due to parent company 18,715 11,005
12 due to tax authorities: 22
_ within 12 months 31,251 149,440
_ beyond 12 months 59 -
Total due to tax authorities 31,310 149,440
13 due to social security and welfare institutions 9,210 8,931
14 other payables: 23
_ within 12 months 49,871 40,427
_ beyond 12 months 19,936 604
Total other payables 69,807 41,031
Total accounts payable 1,265,356 1,399,556
E Accrued expenses and deferred income 24
1 accrued expenses and deferred income 18,478 19,080
Total accrued expenses and deferred income 18,478 19,080
Total liabilities and Shareholders’ equity 2,623,502 2,697,443
Memorandum accounts [thousands of euro]
12.31.2004 12.31.2003 25
Fiduciary guarantees granted
Guarantees 136,488 2,786
Commitments
Sale commitments - 1,950
Purchase commitments 116 6,895
Other
Currency to be sold forward 609,394 581,088
Currency to be purchased forward 341,158 278,267
Notes presented for discount 15 1,725
Total memorandum accounts 1,087,171 872,711
C O N SO LI DATE D F I NANC IAL STATE M E NTS
55

C O N SO LI DATE D F I NANC IAL STATE M E NTS
56
Consolidated statement of income [thousands of euro]
2004 2003 notes
A Value of production
1 Revenues from sales and services 1,686,351 1,858,983 26
2 Change in work in progress, semi-manufactured
products and finished goods 22,811 [35,603] 27
4 Own work capitalized 2,134 750
5 Other revenues and income 51,345 55,868 28
Total value of production 1,762,641 1,879,998
B Production costs
6 Raw materials, other materials, consumables and goods for resale 452,168 487,048 29
7 External services 620,579 657,767 30
8 Leases and rentals 89,728 90,870 31
9 Payroll and related costs: 32
a. wages and salaries 159,172 157,289
b. social security contributions 44,599 45,715
c. employee termination indemnities 8,555 8,858
e. other costs 1,328 1,531
Total payroll and related costs 213,654 213,393
10 Amortization, depreciation and write-downs: 33
a. amortization of intangible fixed assets 40,894 42,916
b. depreciation of tangible fixed assets 58,671 60,741
c. other write-downs of fixed assets 13,332 16,129
d. write-downs of current receivables
and of liquid funds 39,241 48,430
Total amortization, depreciation and write-downs 152,138 168,216
11 Changes in inventories of raw materials, other materials,
consumables and goods for resale 405 6,828
12 Provisions for risks 6,897 11,888 34
13 Other provisions 25,668 11,085 34
14 Other operating costs 22,278 28,709 35
Total production costs 1,583,515 1,675,804
Difference between production value and costs 179,126 204,194
C Financial income and expenses
15 Income from equity investments 375 4,042
16 Other financial income: 36
a. from receivables held as financial fixed assets
from other companies 852 1,945
c. from securities included among current assets
not representing equity investments 1,099 795
d. financial income other than the above:
_ from subsidiary companies - 81
_ from others 20,141 26,102
Total financial income other than the above 20,141 26,183
Total other financial income 22,092 28,923

2004 2003 notes
17 Interest and other financial expenses: 37
_ from subsidiary companies - 49
_ from others 48,631 64,767
Total interest and other financial expenses 48,631 64,816
17 bis Gains/[losses] on exchange rate differences 114 9,652 38
Total financial income and expenses [26,050] [22,199]
D Adjustments to financial assets
18 Revaluations:
c. of securities included among current assets
not representing equity investments 2 -
19 Write-downs:
a. of equity investments 213 261
c. of securities included among current assets
not representing equity investments 16 53
Total write-downs 229 314
Total adjustments to financial assets [227] [314]
E Extraordinary income and expenses
20 Income: 39
_ gains on disposals 24,157 2,870
_ other 15,142 10,369
Total income 39,299 13,239
21 Expenses: 40
_ losses on disposals 4,095 1,902
_ taxes relating to prior years 642 10,916
_ other 23,076 16,784
Total expenses 27,813 29,602
Total extraordinary income and expenses 11,486 [16,363]
Results before income taxes 164,335 165,318
22 Taxes on income for the year, deferred income and expenses 41,754 56,399 41
Income before minority interests 122,581 108,919
[Income]/Loss attributable to minority interests 493 [1,045]
23 Net income for the year 123,074 107,874
C O N SO LI DATE D F I NANC IAL STATE M E NTS
57

C O N SO LI DATE D F I NANC IAL STATE M E NTS
58
Statement of changes in Shareholders’ equity [thousands of euro]
Surplus from Other
Additional monetary reserves Net
Share paid-in revaluations and retained Translation income/[loss]
Capital capital of assets earnings difference for the year Total
Balance as of
December 31, 2002 236,026 56,574 22,058 836,393 [617] [9,861] 1,140,573
Loss for 2002
brought forward - - - [9,861] - 9,861 -
Dividends distributed as
approved at the ordinary
Shareholders’ meeting
on May 12, 2003 - - - [63,546] - - [63,546]
Translation differences
from conversion of foreign
financial statements - - - - [11,040] - [11,040]
Net income for 2003 - - - - - 107,874 107,874
Balance as of
December 31, 2003 236,026 56,574 22,058 762,986 [11,657] 107,874 1,173,861
Income for 2003
brought forward - - - 107,874 - [107,874] -
Dividends distributed as
approved at the ordinary
Shareholders’ meeting
on May 12, 2004 - - - [68,992] - - [68,992]
Translation differences
from conversion of foreign
financial statements - - - - 2,377 - 2,377
Net income for 2004 - - - - - 123,074 123,074
Balance as of
December 31, 2004 236,026 56,574 22,058 801,868 [9,280] 123,074 1,230,320

Statement of changes in minority interests [thousands of euro]
Capital and Net
reserves income Total
Balances as of December 31, 2002 13,171 1,609 14,780
2002 income brought forward 1,609 [1,609] -
Acquisition of investments/Share capital increase [1,337] - [1,337]
Dividends distributed [761] - [761]
Translation differences [928] - [928]
Net income for 2003 - 1,045 1,045
Balances as of December 31, 2003 11,754 1,045 12,799
2003 income brought forward 1,045 [1,045] -
Acquisition of investments/Share capital increase [5,355] - [5,355]
Dividends distributed [422] - [422]
Translation differences 311 - 311
Loss for 2004 - [493] [493]
Balances as of December 31, 2004 7,333 [493] 6,840
C O N SO LI DATE D F I NANC IAL STATE M E NTS
59

C O N SO LI DATE D F I NANC IAL STATE M E NTS
60
Consolidated statement of cash flow [thousands of euro]
2004 2003
Cash flow from operating activities
Income before minority interests 122,581 108,919
Depreciation and amortization 99,565 103,657
Amortization of deferred charges on medium/long-term loans 359 363
Provision for doubtful accounts and other non-monetary charges 76,446 76,517
Provision for income taxes 41,754 56,399
Losses/[Gains] on disposal of assets, investments, net 159 26,493
Payment of termination indemnities and use of other reserves [28,931] [45,275]
Self-financing 311,933 327,073
Payment of taxes [35,627] [71,442]
Change in accounts receivable 56,820 [5,078]
Change in other operating receivables 4,488 [22,885]
Change in inventories [15,245] 42,683
Change in accounts payable [54,904] [16,001]
Change in other operating payables and accruals 1,520 [2,532]
Change in working capital [7,321] [3,813]
Net cash flow from operating activities 268,985 251,818
Cash flow from investing activities
Purchase of tangible fixed assets [114,898] [104,447]
Investment in intangible fixed assets [37,081] [46,091]
Sales of tangible fixed assets 55,134 38,378
Disposal of intangible fixed assets 7,134 103,065
Net change in investment-related receivables and payables 28,597 2,511
Net cash flow from investing activities [61,114] [6,584]
Cash flow relating to equity investments and other investing activities
Purchase of equity investments [21,607] [18,526]
Sale of equity investments 15,167 3,854
[Increase]/Decrease in guarantee deposits and treasury shares 25,267 [27,232]
Total cash flow relating to equity investments and other investing activities 18,827 [41,904]
Payment of dividends [69,414] [64,307]
Payment of substitute tax [124,514] -
Net financing surplus 32,770 139,023

2004 2003
Cash flow from financing activities
Change in Shareholders’ equity 1,960 245
Change in short-term borrowing [10,688] 66,868
Repayment of medium/long-term debt [1,554] [55,710]
Change in securities held as fixed assets 8 -
Change in medium/long-term debt/financial receivables with Group companies 58 1,304
Increase in medium/long-term financial receivables [8,916] [25,248]
Decrease in medium/long-term financial receivables 9,034 7,128
Change in lease financing [3,057] [3,070]
[13,155] [8,483]
Change of liquidity [26,445] [145,468]
Effect of translation adjustments 6,830 14,928
Net cash used by financing activities [32,770] [139,023]
C O N SO LI DATE D F I NANC IAL STATE M E NTS
61

C O N SO LI DATE D F I NANC IAL STATE M E NTS
62
Companies and groups included in the consolidation as of December 31, 2004
Share Group
Name of the company Location Currency Capital interest
Companies and groups consolidated
on a line-by-line basis:
Parent Company
Benetton Group S.p.A. Ponzano Veneto [Tv] Eur 236,026,454.30
Italian subsidiaries
Benetton Retail Italia S.r.l. Ponzano Veneto [Tv] Eur 5,100,000 100.000%
Olimpias S.p.A. Ponzano Veneto [Tv] Eur 47,988,000 100.000%
_ Benair S.p.A. Ponzano Veneto [Tv] Eur 1,548,000 100.000%
Benind S.p.A. Ponzano Veneto [Tv] Eur 26,000,000 100.000%
Fabrica S.p.A. Ponzano Veneto [Tv] Eur 4,128,000 100.000%
_ Colors Magazine S.r.l. Ponzano Veneto [Tv] Eur 1,549,370.69 100.000%
Bencom S.r.l. Ponzano Veneto [Tv] Eur 150,000,000 100.000%
Società Investimenti
e Gestioni Immobiliari [S.I.G.I.] S.r.l. Ponzano Veneto [Tv] Eur 36,150,000 100.000%
_ Buenos Aires 2000 S.r.l. Ponzano Veneto [Tv] Eur 10,516,456 100.000%
Bentec S.p.A. Ponzano Veneto [Tv] Eur 12,900,000 100.000%
Foreign subsidiaries
Benetton Deutschland GmbH Munich Eur 2,812,200 100.000%
Benetton Australia Pty. Ltd. Sydney Aud 500,000 100.000%
Benetton Holding International N.V. S.A. Amsterdam Eur 92,759,000 100.000%
_ United Colors Communication S.A. Lugano Chf 1,000,000 100.000%
_ Benetton Austria GmbH Salzburg Eur 3,270,277.54 100.000%
_ Benetton Ungheria Kft. Nagykallo Eur 89,190 100.000%
_ Benetton Manufacturing Holding N.V. Amsterdam Eur 225,000 100.000%
_ Benetton Têxtil - Confecção de Têxteis S.A. Maia Eur 100,000 100.000%
_ Benetton Manufacturing Tunisia S.à r.l. Sahline Tnd 350,000 100.000%
_ Benetton Croatia d.o.o. Osijek Hrk 2,000,000 100.000%
_ Benetton Tunisia S.à r.l. Sahline Tnd 303,900 100.000%
_ Benetton Trading S.à r.l. Sahline Tnd 20,000 100.000%
_ DCM Benetton India Ltd. New Delhi Inr 109,241,000 100.000%
_ Benetton Trading USA Inc. Lawrenceville Usd 379,148,000 100.000%
_ United Colors of Benetton Do Brasil Ltda. Curitiba Brl 78,634,578 100.000%
_ Benetton Japan Co. Ltd. Tokyo Jpy 400,000,000 100.000%

Share Group
Name of the company Location Currency Capital interest
_ Benetton Retailing Japan Co. Ltd. Tokyo Jpy 160,000,000 100.000%
_ Benetton Korea Inc. Seoul Krw 2,500,000,000 50.000%
_ Benetton Asia Pacific Ltd. Hong Kong Hkd 41,400,000 100.000%
_ Benetton Finance S.A. Luxembourg Eur 181,905,390 100.000%
_ Benetton Società di Servizi S.A. Lugano Chf 80,000,000 100.000%
_ Lairb Property Ltd. Dublin Eur 260,000 100.000%
Benetton International Property N.V. S.A. Amsterdam Eur 17,608,000 100.000%
_ Benetton Real Estate International S.A. Luxembourg Eur 116,600,000 100.000%
_ Benetton Real Estate Belgique S.A. Brussels Eur 14,500,000 100.000%
_ Benetton Real Estate Austria GmbH Vienna Eur 2,500,000 100.000%
_ Benetton Trading S.à r.l. Paris Eur 99,495,711.60 100.000%
_ Benetton Realty France S.A. Paris Eur 94,900,125 100.000%
_ Benetton France Commercial S.A.S. Paris Eur 10,000,000 100.000%
_ Benetton Realty Russia O.O.O. Moscow Rur 64,600,000 100.000%
_ Benetton Realty Portugal Imobiliaria S.A. Maia Eur 100,000 100.000%
_ Benetton Realty Spain S.L. Barcelona Eur 15,270,450 100.000%
_ Benetton Real Estate Spain S.L. Barcelona Eur 150,250 100.000%
Benetton International S.A. Luxembourg Eur 2,500,000 100.000%
_ Benetton Retail Deutschland GmbH Munich Eur 2,000,000 100.000%
_ New Ben GmbH Frankfurt Eur 5,000,000 51.000%
_ Benetton Retail Ungheria Kft. Nagykallo Huf 50,000,000 100.000%
_ Benetton Retail [1988] Ltd. London Gbp 56,800,000 100.000%
_ Benetton Retail Spain S.L. Barcelona Eur 10,180,300 100.000%
_ Benetton 2 Retail Comércio
de Produtos Têxteis S.A. Maia Eur 500,000 100.000%
Benetton USA Corp. Wilmington Usd 84,654,000 100.000%
Investments in subsidiary companies
carried at equity:
_ Benetton Slovakia s.r.o. Dolny Kubin Svk 135,000,000 100.000%
_ Benetton Argentina S.A. Buenos Aires Arp 500,000 100.000%
Investments in subsidiary and associated
companies carried at cost:
_ Consorzio Generazione
Forme - Co.Ge.F. S. Mauro Torinese [To] Eur 15,492 33.333%
C O N SO LI DATE D F I NANC IAL STATE M E NTS
63

Notes to the consolidated financial statements
The consolidated financial statements have been prepared in conformity with chapter III of
Legislative Decree no. 127 of April 9, 1991, which implemented the EC VII Directive in Italy.
The notes to the consolidated financial statements explain, analyze and, in some cases,
supplement the data reported on the face of the financial statements and include information
required by article 38 and other provisions of Legislative Decree no. 127/1991. Additional
information is also provided in order to present a true and fair view of the financial and
operating position of the Group, even where this is not required by specific legislation.
The statement of income and balance sheet for 2004 has been drawn up incorporating
changes required by the reform of company law [Legislative Decree no. 6 of January 17, 2003
and subsequent amendments and additions] as illustrated in the relative paragraph.
Unless otherwise specified, amounts indicated in these notes are expressed in thousands
of euro.
Activities of the Group
Benetton Group S.p.A., the Parent Company, and its subsidiary companies [collectively
the “Group”] primarily manufacture and market fashion apparel in wool, cotton and woven
fabrics, as well as sportswear and leisure goods. The manufacture of finished articles from
raw materials is undertaken partly within the Group and partly using subcontractors, whereas
marketing is carried out through an extensive sales network both in Italy and abroad,
consisting mainly of stores owned by third parties.
Form and content of the consolidated financial statements
The consolidated financial statements of the Group include the financial statements as of
December 31, 2004 of Benetton Group S.p.A., the Parent Company, and all the Italian and
foreign companies in which the Parent Company holds, directly or indirectly, the majority
of the voting rights. They also include the accounts of some 50%-owned companies over
which the Group exercises a dominant influence.
The companies included within the scope of consolidation are listed in the appendix
“Companies and groups included in the consolidation as of December 31, 2004”.
Financial statements utilized for the consolidation are those prepared for approval at the
Shareholders’ meetings of the individual companies.
Financial statements of foreign subsidiaries have been reclassified, where necessary, for
consistency with the format adopted by the Parent Company. Such financial statements have
been adjusted so that they are consistent with the accounting policies referred to below.
A reconciliation between Shareholders’ equity and net income as reported in the statutory
financial statements of Benetton Group S.p.A., and the consolidated Shareholders’ equity
and net income of the Group is presented in the consolidated Shareholders’ equity section.
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Principles of consolidation
The most significant consolidation principles adopted for the preparation of the consolidated
financial statements are as follows:
a. The assets and liabilities of subsidiary companies are consolidated on a line-by-line basis
and the carrying value of investments held by the Parent Company and other consolidated
subsidiaries is eliminated against the related Shareholders’ equity accounts.
b. When a company is consolidated for the first time, any positive difference emerging
from the elimination of its carrying value on the basis indicated in a] above, is allocated,
where applicable, to the assets of the subsidiary. Any excess arising upon consolidation,
described as “consolidation difference”, is entered in assets in “Goodwill and consolidation
differences”.
Negative differences are classified within the “Reserve for future risks and charges arising
on consolidation” if they reflect expected future losses; otherwise, they are classified as part
of the “Consolidation reserve” within Shareholders’ equity.
Goodwill is amortized over its estimated useful life.
c. Intercompany receivables and payables, costs and revenues, and all significant transactions
between consolidated companies, including the intragroup payment of dividends, are
eliminated.
Unrealized intercompany profits and gains and losses arising from transactions between
Group companies are also eliminated.
d. The minority Shareholders’ interest in Shareholders’ equity and the results for the year of
consolidated subsidiaries are classified separately as “Minority interests” in the consolidated
balance sheet and as “Income attributable to minority interests” in the consolidated income
statement.
e. The financial statements of foreign subsidiaries are translated into euro using year-end
exchange rates for balance sheet items and average exchange rates for the year for income
statement items.
Differences arising from the translation into euro of foreign currency financial statements
are reflected directly in consolidated Shareholders’ equity.

Accounting principles and valuation criteria
These have been adopted in observance of article 2426 of the Italian Civil Code, also taking
account of accounting principles prepared by the Italian Accounting Profession and, in the
absence thereof, those issued by the International Accounting Standards Board [IASB].
Intangible fixed assets. These are recorded at purchase or production cost, including related
charges. The value of these assets may be subject to revaluation in accordance with statutory
regulations.
One method for determining the value of intangible fixed assets is to allocate the excess price
deriving from investments acquired or other company transactions. This type of allocation is
used for excess prices paid for trademarks acquired under these types of operation, on the
basis of an independent appraisal.
Intangible fixed assets are written down in cases where, regardless of the amortization
accumulated, there is a permanent loss in value. The value of such assets is reinstated in future
accounting periods should the reasons for such write-downs no longer apply.
Book value is systematically amortized on a straight-line basis in relation to the residual useful
economic lives of such assets. The duration of amortization plans is based on the estimated
economic use of these assets.
Normally, amortization periods for trademarks fluctuate between fifteen and twenty-five
years, while patents are amortized over three years. Goodwill and consolidation differences
are amortized over ten years. Leasehold improvements costs are amortized over the duration
of the lease contract. Start-up and expansion expenses and other deferred charges are mostly
amortized over five years.
Tangible fixed assets. These are recorded at purchase or production cost, revalued where
required or permitted by statutory regulations. Cost includes related charges and direct and
indirect expenses reasonably attributable to the individual assets. Tangible fixed assets are
written down in cases where, regardless of the depreciation accumulated, there is a permanent
loss in value. The value of such assets is reinstated in future accounting periods should the
reasons for such write-downs no longer apply. Ordinary maintenance costs are fully expensed
as incurred. Improvement expenditure is allocated to the related assets and depreciated over
their residual useful lives.
Depreciation is calculated systematically on a straight-line basis using rates considered to
reflect the estimated useful lives of the assets. In the first year such assets enter into service,
these rates are halved in consideration of their shorter period of use.
The depreciation rates applied by consolidated companies are as follows:
Real estate 2% - 3%
Plant and machinery 8% - 25%
Industrial and commercial equipment 10% - 25%
Other tangible fixed assets:
_ office and store furniture, furnishings and electronic machines 10% - 25%
_ vehicles 20% - 25%
_ aircraft 6%
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In order to incorporate the changes required by the reform of company law [Legislative
Decree no. 6 of January 17, 2003 and subsequent amendments and additions] in the statutory
financial statements of Italian Group companies, eliminations have been made of tax-based
adjustments resulting from accelerated depreciation made in prior years, by allocating past
income effects to extraordinary income and the relative tax effects to extraordinary expenses.
These impacts have been reversed in the consolidated financial statements where they had
already been eliminated in previous years.
Assets acquired under finance leases are stated at their fair value at the start of the lease and
the capital portion of the lease installments is recorded as a liability to the leasing company.
Financial fixed assets. Investments in subsidiaries not consolidated on a line-by-line basis,
because no longer operative or in liquidation at the date of the financial statements, together
with those in associated companies, are valued at cost on an equity basis, eliminating the
Group’s share of any unrealized intercompany profits, where significant.
The difference between cost and Shareholders’ equity of subsidiary companies at the time they
are acquired is allocated on the basis described in paragraph b] of the consolidation principles.
Equity investments of less than 20% in other companies are stated at cost, which is written
down where there is a permanent loss in value. The original value of these investments is
reinstated in future accounting periods should the reasons for such write-downs no longer apply.
Receivables included among financial fixed assets are stated at their estimated realizable value.
Other securities in fixed assets are entered at cost, adjusted for issue and dealing discounts.
This cost is written down for any lasting losses of value.
Inventories. Inventories are stated at the lower of purchase or manufacturing cost, generally
determined on a weighted average cost basis, and their market or net realizable value.
Manufacturing cost includes raw materials and all direct and indirect production-related
expenses.
The calculation of estimated realizable value includes any manufacturing costs still to be
incurred and direct selling expenses. Obsolete and slow-moving inventories are written
down in relation to their possibility of employment in the production process or to their net
realizable value.
Accounts receivable. These are recorded at their estimated realizable value, net of
appropriate reserves for doubtful accounts determined on a prudent basis. Any medium/longterm
receivables that include an implicit interest component are discounted using a suitable
market rate.
Receivables discounted without recourse, for which the insolvency risk is transferred to the
acquirer, are reversed in the financial statements at their nominal value. Commission paid to
the factoring company for the service is included in expenses for financial services.
Other securities not held as fixed assets. These securities are stated at the lower of purchase
cost and market value; the original value of these investments is reinstated in future accounting
periods, should the reasons for such write-downs no longer apply.
Securities acquired subject to resale commitments are recorded at cost and classified among
other securities not held as fixed assets. The difference between the spot and forward prices of
such securities is recognized in the period to which it relates over the duration of the contract.
Accruals and deferrals. These are recorded to match costs and revenues in the accounting
periods to which they relate.

Reserves for risks and charges. These reserves cover known or likely losses, the timing and
amount of which cannot be determined at year-end. The reserves reflect the best estimate
of losses to be incurred based on the information available.
Reserve for employee termination indemnities. This reserve represents the liability of
Italian companies within the Group for indemnities payable upon termination of employment,
accrued in accordance with labor laws and labor agreements in force. This liability is subject to
annual revaluation using the officially-established indices.
Accounts payable. These are stated at face value. The implicit interest component which is
included in medium/long-term debt is recorded separately using a suitable market rate.
Transactions in foreign currencies. Transactions in foreign currencies are recorded using the
exchange rates in effect at the transaction dates. Exchange gains or losses realized during the
year are included in the consolidated statement of income.
At the date of the financial statements, the Italian Group companies adjust receivables and
payables in foreign currency to the exchange rates ruling at the year end, booking all resulting
gains and losses to the income statement. Exchange gains or losses incurred, on forward
contracts opened to hedge receivables and payables are booked to the income statement; the
discount or premium on these contracts is recorded on an accrual basis.
The value of forward contracts, other than those hedging specific foreign currency assets
and liabilities, is restated at year-end with reference to the differential between the forward
exchange rates applicable to the various types of contract at the balance-sheet date and
the contracted forward exchange rates; the net result of this comparison is charged to the
statement of income.
Revenue recognition. Revenues from product sales are recognized when change of ownership
occurs, which normally occurs at the time of shipment to the customer.
Expense recognition. Expenses are recorded on accrual basis.
Income taxes. Current income taxes are provided on the basis of a reasonable estimate of the
tax liability for the year, in accordance with applicable local regulations.
Italian companies of the Group are participating in a national tax consolidation according to
articles 117 and subsequent of the Tax Consolidation Act DPR 917/86 based on a proposal by
the consolidating parent company Edizione Holding S.p.A. which exercised the option for this
ruling on December 30, 2004.
The duration of the option is three years starting from the 2004 fiscal year.
Relationships arising from participation in the consolidation are governed by specific Rules
approved and signed by all participating companies.
This participation enables the companies to identify, and then transfer, current taxes, even
when the taxable result is negative, with a receivable from Edizione Holding S.p.A. as the
counter entry. Vice versa, if the taxable result is positive, current taxes have a payable to the
parent company as the counter entry.
The relationship between the parties, governed by a contract, provides for the recognition by
all of the amount calculated based on the fiscal losses and profits transferred at current IRES
(corporation tax) rates.
Moreover, the net total of prepaid and deferred tax is recorded.
Deferred tax assets relate to costs and expenses not yet deductible at year-end, to
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consolidation adjustments and to the benefit of accumulated tax losses carrying forward;
deferred tax assets are recognized when there is a high degree of certainty that they can be
recovered in the future.
Deferred tax liabilities refer to transactions where taxation is deferred to future years, such as
gains on the disposal of tangible and intangible fixed assets or consolidation adjustments arising
from the reversal of accelerated depreciation or lease transactions recorded as finance leases.
Deferred tax assets are adjusted to take account of the reasonable certainty of their recovery.
Supplementary information
Accounting treatment of the business transfers in the consolidated financial statements.
The businesses transferred by the Parent Company to three Italian companies in December
2003 involved transferring assets and liabilities on the basis of a valuation carried out by
expert appraisers in accordance with art. 2343 of the Italian Civil Code.
The assets transferred mainly consisted of trademarks and patents, licenses and software, real
estate, plant and machinery and IT equipment.
The expert appraisal recalculated the residual useful life of the assets and gave each of them
a value, which resulted in a significant capital gain for the transferor in the financial statements
to December 31, 2003, which, reassessed for tax purposes, was subject to the 19% flat-rate
substitute tax as per arts. 1 and 4.2 of D. Lgs. 358/1997.
The accounting treatment of this operation had the following impact on the consolidated
financial statements:
_ elimination of the intercompany gain on transfer and reallocation of the pre-contribution
values to the various assets and related reserves;
_ elimination of the depreciation and amortization charged on the new higher values in the
transferee companies;
_ recalculation of depreciation and amortization on the basis of the assets’ historical costs and
adjustment of their residual useful life to that established for the financial statements of the
transferee companies.
The substitute tax will make it possible to deduct the depreciation and amortization on
these capital gains for tax purposes in future years. This tax was paid in the first half of
2004. According to Accounting Principle no. 25 issued by the Italian Accounting Profession,
elimination of the intercompany gains in the consolidation will give rise to timing differences
between the post-elimination asset values in the consolidated financial statements and the
corresponding values shown in the statutory financial statements of the transferee companies,
in which deferred tax assets have been booked.
These deferred tax assets have been calculated by applying the current tax rate to the said
timing differences, given that it is reasonably certain that they will be recoverable in future
years by earning sufficient taxable income, as reflected in the Company’s forecasts.
The Killer Loop brand, on the other hand, was transferred at fair value, based on an appraisal.
Such fair value was lower than the book value. The expert appraisers chose the “market
royalty rate” as their main method of valuation as this was considered the most prudent, even
if it does not necessarily represent the value that could be obtained by selling the brands
(market value). As pointed out in this appraisal, different methods of valuation can lead to
quite different values; in fact, the appraisers used “enterprise value” as a control method to
assess the economic sustainability of the values indicated by the main valuation method. Under
this method, the value of the Killer Loop brand and related goodwill as shown in the financial
statements were confirmed and the expected cash flows were not at risk of impairment.

Article 2423, paragraph 4, of the Italian Civil Code. Departures from statutory accounting
criteria and policies according to the fourth paragraph of article 2423 of the Italian Civil Code
have not occurred.
Statement of cash flows. The statement of consolidated cash flows provides information by
type of flow and activity. Cash and bank accounts and readily marketable securities are treated
as cash.
Reform of company law. The statement of income and balance sheet have been drawn up
incorporating changes required by the reform of company law [Legislative Decree no. 6 of
January 17, 2003 and subsequent amendments and additions], which required some changes
to the consolidated financial statements relative to the financial statements; in particular in
accordance with art. 2423 ter, paragraph 5, the following items were reclassified as of December
31, 2003 to put them on a like basis and comparable with those at December 31, 2004:
_ C 4 bis “Taxes”;
_ C 4 ter “Deferred tax assets”;
_ C 17 bis “Gains/[losses] on exchange rate differences”;
_ information on receivables and payables, which must be analyzed by geographic area.
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Comments on principal asset items
Fixed assets
[1] Intangible fixed asset
12.31.2004 12.31.2003
[thousands of euro] Gross Net Gross Net
Start-up and expansion expenses 17,633 3,685 18,367 7,361
Industrial patents and intellectual property rights 3,477 1,099 3,355 1,491
Concessions, licenses, trademarks and similar rights 65,890 23,942 64,851 26,734
Goodwill and consolidation differences:
_ goodwill 120,970 84,048 110,464 83,236
_ consolidation differences 17,325 6,237 17,542 6,842
Total goodwill and consolidation differences 138,295 90,285 128,006 90,078
Assets under construction and advance payments 222 222 206 206
Other intangible fixed assets:
_ issue expenses for bonds and loans 1,653 491 1,722 876
_ software and other 66,355 24,724 58,087 25,798
_ leasehold improvements 98,961 64,985 103,187 78,481
Total other intangible fixed assets 166,969 90,200 162,996 105,155
Total 392,486 209,433 377,781 231,025
“Start-up and expansion expenses” include 3,060 thousand euro in start-up expenses for retail
projects.
“Concessions, licenses, trademarks and similar rights” include the net book value of the
following brands:
[thousands of euro] 12.31.2004 12.31.2003
United Colors of Benetton 3,046 2,964
Sisley 444 426
Killer Loop 14,273 16,058
Other 1,112 1,206
Total 18,875 20,654
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“Goodwill” is made up essentially of the value of the retailing companies bought in Italy’s main
cities with a view to developing the network of clothes stores. Increases in 2004 relate mainly
to investments in the sales network in Italy and Belgium.
“Consolidation differences” of 6,237 thousand euro reflect the residual goodwill emerging
from consolidation of the companies acquired, with 1,549 thousand euro attributable to the
business represented by the Killer Loop trademark and the remainder to other European
companies. This consolidation difference is amortized over ten years, which is considered
appropriate since it is consistent with the accounting policies currently applied in the sector
where Group companies operate.
Leasehold improvements relate mainly to the restructuring and modernization of stores
belonging to third parties; the change in the year is due to new investments, amortization and
adjustments to market value in some foreign companies.
“Software and other” includes costs incurred for the purchase and development of software
which represent costs incurred for the study, diagnosis and implementation, as well as the
purchase, of IT programs and applications. The increase in this item relates to purchases from
third parties and internal development of programs.
This item also includes costs incurred for the early vacation of third party premises, which are
amortized over the life of the lease, as well as expenses related to taking over lease contracts
of properties and companies.
Movements in the principal intangible fixed asset items during 2004 were as follows:
Concessions,
licenses,
trade marks Goodwill and Other
Patent and similar consolidation Leasehold intangible
[thousands of euro] rights rights differences improvements fixed assets Total
Net opening balance 1,491 26,734 90,078 78,481 34,241 231,025
Change in the scope of consolidation - 5 4,409 [1] - 4,413
Additions 130 1,327 15,103 8,701 11,819 37,080
Disposals [7] [94] [4,452] [4,235] [1,124] [9,912]
Amortization [515] [3,968] [12,090] [9,347] [14,974] [40,894]
Translation differences
and other movements - [62] [2,763] [8,614] [840] [12,279]
Net closing balance 1,099 23,942 90,285 64,985 29,122 209,433

[2] Tangible fixed assets
Tangible fixed assets are stated net of accumulated depreciation of 419,293 thousand euro.
Additions in the period mainly concerned:
_ investments in real estate for commercial use and the related modernization and upgrading
of premises;
_ plant, machinery and equipment purchased to improve the efficiency of production
processes, particularly in the Italian manufacturing companies.
The depreciation charge for the period was 58,671 thousand euro.
Movements in the principal tangible fixed asset items during 2004 were as follows:
Industrial and Fixed assets
Real Plant and commercial Other in progress
[thousands of euro] estate machinery equipment assets and advances Total
Net opening balance 540,099 87,343 1,206 68,173 17,019 713,840
Change in the scope of consolidation - - - 1,639 - 1,639
Additions 75,545 19,224 251 24,030 3,610 122,660
Disposals [24,654] [8,196] [29] [2,047] [472] [35,398]
Depreciation [17,173] [19,765] [593] [21,140] - [58,671]
Translation differences
and other movements 16,367 892 49 [3,149] [16,433] [2,274]
Net closing balance 590,184 79,498 884 67,506 3,724 741,796
Some tangible fixed assets are pledged as security for long-term loans from banks and other
lenders. The outstanding balance of such loans is 1,195 thousand euro.
Additions in respect of “Other assets” relate to investments in furniture, furnishings and
electronic machines of 19,322 thousand euro, to acquisitions of leased assets of 3,741 thousand
euro and to vehicles and aircraft of 967 thousand euro.
Other assets include the following assets acquired under finance leases:
[thousands of euro] 12.31.2004 12.31.2003
Real estate 9,472 13,790
Other assets 3,787 123
less - Accumulated depreciation [1,516] [1,577]
Total 11,743 12,336
Outstanding capital payments due to lessors as of December 31, 2004, classified as amounts
due to leasing companies, are reported in the note “Due to other lenders”.
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[3] Financial fixed assets
Equity investments. Equity investments in subsidiary companies relate primarily to foreign
selling and production companies. These companies are valued at cost or by the equity
method and are not included in the consolidation because they are non-operative or in
liquidation at the date of the financial statements.
Other investments mainly represent minority interests in Italian and Japanese companies
and in a Swiss company.
The balance as of December 31, 2003 related mainly to the purchase, for 15,000 thousand
euro, of 10% of the share capital of Tecnica S.p.A., sold in the third quarter of 2004.
Accounts receivable
Maturities [in years]
[thousands of euro] Within 1 From 1 to 5 Beyond 5 12.31.2004 12.31.2003
Other receivables:
_ due within 12 months 9,326 - - 9,326 34,742
_ due beyond 12 months - 22,458 5,816 28,274 30,615
Total other receivables 9,326 22,458 5,816 37,600 65,357
Guarantee deposits - - 16,715 16,715 15,832
Total 9,326 22,458 22,531 54,315 81,189
Other receivables as of December 31, 2004 maturing beyond 1 year include financial
receivables with interest at market rates. Accounts receivable due from others within
12 months include 368 thousand euro in tax credits for advance taxes paid by the Italian
companies in relation to employee termination indemnities, under Law 140 of May 28, 1997.
Guarantee deposits outstanding as of December 31 mainly relate to lease contracts stipulated
by the Japanese subsidiary.
Other securities held as financial fixed assets
[thousands of euro] 12.31.2004 12.31.2003
Other 223 9
The balance corresponds to foreign securities purchased by a German subsidiary.

Current assets
[4] Inventories
Inventories, of 255,436 thousand euro [233,736 thousand euro as of December 31, 2003], are
shown net of the related write-down reserve, analyzed as follows:
[thousands of euro] 12.31.2004 12.31.2003
Raw materials, other materials and consumables 2,334 348
Work in progress and semi-manufactured products 750 590
Finished goods 14,727 7,546
Total 17,811 8,484
The valuation of closing inventories at weighted average cost is not appreciably different from
their value at current purchase cost.
[5] Accounts receivable
Trade receivables. As of December 31, 2004, trade receivables, net of the reserve for doubtful
accounts, amount to 660,402 thousand euro [755,734 thousand euro as of December 31, 2003].
The reserve for doubtful accounts at December 31, 2004 amounts to 97,642 thousand euro
[95,870 thousand euro as of December 31, 2003]. 33,862 thousand euro of this reserve
was used during the period. Valuation of the risk, both specific and generic, associated with
receivables existing at year-end, resulted in a provision to the reserve of 39,240 thousand euro.
Moreover, in the fourth quarter of 2004, trade receivables were discounted without recourse
through a factoring contract with Unicredit Factoring S.p.A., amounting to around 18,500
thousand euro, of which 14,900 thousand euro had not yet matured at year-end.
The analysis of trade receivables with third parties by geographic area is shown below:
The Rest of the
[thousands of euro] Europe Asia Americas world Total
Trade receivables 595,902 33,362 30,225 913 660,402
Due from subsidiaries, associated companies and the parent company. Receivables from the
parent company Edizione Holding S.p.A., of 32,688 thousand euro, include:
_ receivables maturing within the next twelve months of 405 thousand euro, of which 86
thousand euro were trade and 319 thousand euro other;
_ receivables due beyond the next twelve months of 32,283 thousand euro, representing
current taxes calculated on the negative taxable results of some Group companies as
provided by the Rules for relationships between companies participating in a national fiscal
consolidation; these receivables fall due in 2006.
Receivables from associated companies of 351 thousand euro were trade receivables.
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[6] Tax receivables. These include:
_ VAT recoverable from the tax authorities of 27,422 thousand euro [18,481 thousand euro as
of December 31, 2003], including 1,238 thousand euro due beyond 12 months;
_ tax credits of 9,362 thousand euro [5,553 thousand euro as of December 31, 2003],
including 287 thousand euro maturing beyond 12 months;
_ other receivables from the tax authorities of 4,860 thousand euro, including 527 thousand
euro maturing beyond twelve months.
[7] Deferred tax assets. The following table shows total net deferred tax assets:
[thousands of euro] 12.31.2004 12.31.2003
Tax effect of eliminating intercompany profits 4,162 5,955
Tax effect of provisions and costs which will be deductible in future years 81,243 79,828
Deferred taxes on reversal of excess depreciation and accounting for leases
using the financing method [15,355] [17,685]
Deferred taxes on gains taxable over a number of accounting periods [2,927] [2,267]
Deferred tax assets on losses 595 -
Different basis for the depreciation/amortization
of tangible/intangible fixed assets 115,650 128,500
Total benefit on losses brought forward for tax purposes 140,329 135,153
Deferred taxes on profits/reserves distributable by subsidiaries [7,957] -
Total deferred tax assets 315,740 329,484
Adjustment of benefits on losses brought forward [133,116] [127,234]
Total 182,624 202,250
Potential tax benefits deriving from tax losses which may be carried forward by Group
companies are recognized for the theoretical maximum amount and, at the same time, partially
written down because their recoverability is not reasonably certain.
The deferred tax assets relate to:
[thousands of euro] 12.31.2004 12.31.2003
Italian companies 165,141 179,282
Foreign companies 17,483 22,968
Total 182,624 202,250
[8] Other receivables. These include advances to agents and suppliers, receivables for the sale of
fixed assets and other items. The amount due beyond twelve months is 6,701 thousand euro.
[9] Assets due to be sold. This item, of 7,840 thousand euro, arises from the reclassification to
current assets of the realizable value of “Manifattura Goriziana” business, following shutdown
of activity in the relative factory. The operation did not have a significant impact in the
statement of income; while the balance sheet includes an asset relative to the sale. The 2003
amount related to the amount agreed for the sale of a property owned by a foreign subsidiary,
which was received during 2004.

[10] Financial assets not held as fixed asset
Treasury shares. The Company was not holding any treasury shares at the close of the year.
Other securities
[thousands of euro] 12.31.2004 12.31.2003
Government bonds [BTP] maturing between 2005 and 2006
at interest rates between 2.75% and 4.5% 32,509 7,201
Treasury Certificates [CCT] maturing between 2008 and 2011
at an interest rate of 2.4% 20,550 14,866
Zero coupon Treasury certificates [CTZ] maturing in 2005
at rates of interest between 2.064% and 2.068% 29,796 -
Ordinary Government bonds [BOT] maturing in 2005
at interest rates between 2.092% and 2.098% 29,658 -
Amex European Short Term Euro 824 822
Gestielle Bt Euro - 605
Sinopia Alternactiv Euro 609 -
Generali Am-Eu Sty-cd cap 557 -
Vontobel Euro Bond A2 551 -
Morgan Fund-Short Maturity Euro 1,243 1,513
SCH Euro Short Term A Euro 1,582 2,282
Total 117,879 27,289
The following transactions were carried out during the year by the Parent Company:
_ purchases of bonds [BTP, CTZ, CCT and BOT] for 103,468 thousand euro;
_ sale of bonds [BTP and CCT] for 12,996 thousand euro, including 8,058 thousand euro of
bonds purchased in previous years;
_ purchases of monetary fund units for 3,590 thousand euro;
_ sale of monetary fund units for 3,446 thousand euro, including 3,157 thousand euro
purchased in previous years.
Differentials on forward transactions
[thousands of euro] 12.31.2004 12.31.2003
Differentials on forward transactions 6,857 10,000
The amount refers principally to the adjustment of hedging transactions outstanding at the end
of the year to year-end exchange rates.
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[11] Liquid funds
[thousands of euro] 12.31.2004 12.31.2003
Current account deposits [euro] 31,726 26,058
Current account deposits [foreign currencies] 26,773 31,756
Time deposits [euro] 141,522 204,281
Time deposits [foreign currencies] 154 2,929
Checks 59,594 59,503
Cash in hand 427 308
Total 260,196 324,835
The time deposits in euro are liquid funds belonging to the finance companies. They also
include a bank deposit of 94,500 thousand euro made by the Parent Company with due date
January 3, 2005.
Average interest rates reflect market returns for the various currencies concerned.
The amount of cash and banks as of December 31, 2004 reflects the receipts from customers
at year end.
[12] Accrued income and prepaid expenses
[thousands of euro] 12.31.2004 12.31.2003
Accrued income:
_ financial income 2,792 3,810
_ other income 125 159
Total accrued income 2,917 3,969
Prepaid expenses:
_ financial charges 2,165 27
_ rentals and leasing charges 4,929 8,871
_ advertising and sponsorships 113 278
_ taxes 1,551 847
_ other expenses 1,610 1,625
_ discount on bond 82 225
Total prepaid expenses 10,450 11,873
Total 13,367 15,842
Accrued income relates mainly to interest maturing on temporary investments of liquidity
and interest on outstanding Interest Rate Swaps, to hedge the rate on the loan of 500,000
thousand euro obtained in 2000.
In previous years, merger differences were released from further taxation via payment of a
substitute tax at 27%. This substitute tax has been classified under current income taxes with
a matching balance in “Due to tax authorities”. In accordance with the concept of allocating
costs to the appropriate period, some 406 thousand euro of this tax has been recorded as
a prepayment because the cost of freeing up merger differences from tax is related to the
benefit deriving from future tax savings linked to the possibility of deducting depreciation
and amortization. Given the different periods of depreciation/amortization for the assets
concerned and taking account of the prudence principle, the substitute tax is being deferred
over a period of 10 years.

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Comments on principal liability and equity items
[13] Shareholders’ equity
Share Capital
The share capital of Benetton Group S.p.A. at December 31, 2004 amounts to 236,026,454.30
euro and consists of 181,558,811 shares with a par value of 1.30 euro each. The 1980 spin-off
reserve and part of the monetary revaluation reserves were capitalized by Benetton Group
S.p.A. in prior years by the issue of stock dividends.
Additional paid-in capital
This balance is unchanged with respect to the previous year.
Revaluation reserves
The monetary revaluation reserves exclusively reflect the residual amounts of revaluation
reserves established in accordance with the provisions of Law 72 of March 19, 1983 and Law
413 of December 30, 1991, and the monetary revaluation of tangible fixed assets by a Spanish
subsidiary [Royal Decree 2607/96].
Legal reserve
The increase in the legal reserve derives from the allocation, in accordance with the law and
the articles of association, of a proportion of the Parent Company profit for the year ending
on December 31, 2003.
Other reserves
As of December 31, 2004, this item amounts to 745,378 thousand euro [719,089 thousand
euro as of December 31, 2003], and includes:
_ 551,000 thousand euro relating to other reserves of the Parent Company [60,722 thousand
euro as of December 31, 2003];
_ [9,280] thousand euro relating to the cumulative translation adjustment generated by
translating the foreign-currency financial statements of companies consolidated on a
line-by-line basis;
_ 203,658 thousand euro representing the additional Shareholders’ equity of consolidated
companies with respect to their carrying value, together with other consolidation
adjustments.
The first of the schedules which follow reconciles the Shareholders’ equity and net income of
Benetton Group S.p.A. with the corresponding consolidated amounts; the second lists the
Shareholders’ equity of consolidated subsidiaries attributable to minority Shareholders.

Reconciliation of the Shareholders’ equity and net income of Benetton Group S.p.A. with the
corresponding consolidated amounts.
12.31.2004 12.31.2003
Shareholders’ Net income/ Shareholders’ Net income/
[thousands of euro] equity [loss] equity [loss]
Per Benetton Group S.p.A. financial statements 948,130 39,153 977,969 574,241
Net income and Shareholders’ equity of consolidated
subsidiaries attributable to the Group, net of their
carrying value and the effect of business transfers 832,591 197,838 698,113 45,836
Reversal of gains on transfer of businesses,
net of deferred tax receivables on the transfers [551,988] [12,850] [539,138] [539,138]
Reversal of equity investments in the Parent Company 2,071 14,460 - 113,342
Reversal of dividends received from
consolidated subsidiaries - [80,039] - [92,990]
Reversal of merger differences and related
amortization in Benetton Group S.p.A. [16,432] 1,529 [17,961] 2,245
Deferred taxes on profits/reserves
distributable by subsidiaries [7,957] [7,957] - -
Allocation to fixed assets of the difference between
the purchase price and Shareholders’ equity of new
subsidiaries at the time they were acquired,
and related depreciation 34,448 [8,094] 33,595 916
Effect of reversing accelerated depreciation exceeding
the useful lives of fixed assets and of intercompany gains
on transfers of tangible fixed assets, net of the related
tax effect [3,800] [17,032] 25,727 2,521
Effect of applying finance lease accounting,
taking account of the related tax effect 8,104 891 7,213 1,639
Elimination of intercompany profits included
in the inventory of consolidated subsidiaries,
net of the related tax effect [13,953] [2,781] [11,172] 844
Adjustment to reflect the equity value
of associated companies [130] [213] 99 [279]
Net effect of other consolidation entries [764] [1,831] [584] [1,303]
Per the Group consolidated financial statements 1,230,320 123,074 1,173,861 107,874
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[14] Minority interests
At December 31, 2003 and 2004, the following consolidated companies had proportions of
Shareholders’ equity attributable to minority Shareholders:
[in %] 12.31.2004 12.31.2003
Italian subsidiaries:
_ Olimpias group - 15
Foreign subsidiaries:
_ New Ben GmbH 49 49
_ DCM Benetton India Ltd. - 50
_ Benetton Korea Inc. 50 50
Changes relative to the Olimpias group and DCM Benetton India Ltd. relate respectively to
the acquisition of 15% of the share capital of Olimpias S.p.A. from minority Shareholders and
the purchase of 50% of the share capital of DCM Benetton India Ltd. from third parties.
[15] Reserves for risks and charges
Taxation reserve, including deferred
[thousands of euro] 01.01.2004 Provisions Uses 12.31.2004
Taxation reserve 3,039 22 3,015 46
The taxation reserve of 46 thousand euro [3,039 thousand euro at December 31, 2003], was
used for charges deriving from the tax amnesty governed by Law no. 289 of December 27,
2002 and subsequent amendments.
Other reserves
[thousands of euro] 12.31.2004 12.31.2003
Reserve for contingencies 9,114 9,235
Agents’ leaving indemnity reserve 14,298 12,745
Reserve for other provisions 27,532 17,354
Total 50,944 39,334
The reserve for contingencies covers risks of various types, including, at year-end, those of
which the amount or date when they may occur is uncertain, but where a liability could arise in
future years; in the reference period, uses were made of the reserve totaling 6,990 thousand
euro, of which 3,094 thousand euro to the statement of income, and it was built up again by
7,092 thousand euro for disputes arising in the year.
The agents’ leaving indemnity reserve prudently reflects indemnities associated with the
interruption of agency contracts in circumstances allowed by Italian law. During the period,
813 thousand euro was used from the reserve and it was credited with an additional 2,365
thousand euro in provisions.
The reserve for other provisions at the start of the year was almost totally used for closure
of some directly managed stores in the United States and England. It was increased by 25,668
thousand euro for expenses and liabilities expected for the closure of some stores related to
restructuring of the sales network, especially in France and England.

[16] Reserve for employee termination indemnities
Movements in the reserve during the year were as follows:
[thousands of euro]
Balance as of January 1, 2004 49,774
Provision for the year 8,555
Indemnities paid during the year [6,723]
Other movements [88]
Balance as of December 31, 2004 51,518
Indemnities paid in the period related mainly to the Olimpias group, Benind S.p.A., Benetton
Group S.p.A and Bencom S.r.l.
Accounts payable
The composition of and more significant changes in this group of accounts during the year are
discussed below.
[17] Bonds
In July 2002, Benetton Group S.p.A. issued a 300,000 thousand euro bond, repayable on July
26, 2005, bearing floating-rate interest, which was 2.645% at year-end; the bonds are listed on
the Luxembourg stock exchange.
This loan provides for limitations on the granting of real guarantees for new loans; it does not
provide for compliance with any financial ratios [“financial covenants”].
[18] Due to banks
[thousands of euro] 12.31.2004 12.31.2003
Current account overdrafts 8,238 8,700
Advances on receivables and other short-term loans 11,686 25,179
Medium/long-term loans:
_ due within 12 months 1,041 1,509
_ due beyond 12 months 500,710 501,739
Total medium/long-term loans 501,751 503,248
Total 521,675 537,127
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Medium/long-term loans from banks outstanding at year-end were as follows:
[thousands of euro] 12.31.2004 12.31.2003
Syndicated loan of 500 million euro maturing in 2007, granted by a
pool of banks and made up of a revolving credit line for the first two
years and a loan for the subsequent 5 years repayable on maturity.
The annual interest rate at the balance-sheet date was 2.454% [1] 500,000 500,000
Loan from Efibanca [Ente Finanziario Interbancario S.p.A.] at an
annual rate of 2.81% repayable in half-yearly installments until 2005 355 710
Loan from Istituto Mobiliare Italiano at an annual rate of 2.55%, repaid in 2004 - 516
Loan granted by Medio Credito del Friuli, repayable in half-yearly
installments until January 1, 2007, at an annual interest rate of 2.5%
secured by mortgages on real estate 1,168 1,616
Loan granted by CARI [Gorizia] on April 20, 2001 repayable in 2005
at an annual rate of 4% 202 392
Other foreign currency loans obtained by foreign consolidated companies,
secured by mortgages on real estate 26 14
Total medium/long-term loans 501,751 503,248
less - Current portion [1,041] [1,509]
Medium/long-term loans, net of current portion 500,710 501,739
[1] This loan provides for compliance with two financial ratios, calculated every six months on the consolidated
financial statements, namely:
_ minimum ratio between EBITD [earnings before interest, tax and depreciation] and net financial charges
of 2.5 times;
_ maximum ratio between the net financial position and Shareholders’ equity of 1.
There are also limits on large disposals of assets and on the granting of real guarantees for new loans.
The non-current part of medium/long-term loans at December 31, 2004, of 500,710 thousand
euro, have repayment dates between 1 and 5 years.
Part of medium/long-term loans, 1,194 thousand euro, is secured by mortgages on tangible
fixed assets.

[19] Due to other lenders
[thousands of euro] 12.31.2004 12.31.2003
Other short-term loans 3,585 800
Medium/long-term loans:
_ due within 12 months 60 58
_ due beyond 12 months 470 530
Total medium/long-term loans 530 588
Due to leasing companies:
_ due within 12 months 6,007 4,977
_ due beyond 12 months 17,748 21,834
Total due to leasing companies 23,755 26,811
Total 27,870 28,199
Medium/long-term loans obtained from other lenders outstanding at the balance sheet date
are as follows:
[thousands of euro] 12.31.2004 12.31.2003
Other euro loans 530 588
less - Current portion [60] [58]
Medium/long-term loans, net of current portion 470 530
The non-current portion of these loans as of December 31, 2004 falls due as follows [thousands
of euro]:
Year 12.31.2004
2006 63
2007 117
2008 68
2009 71
2010 and beyond 151
Total 470
The non-current portion of amounts due to leasing companies as of December 31, 2004 falls
due as follows [thousands of euro]:
Year 12.31.2004
2006 6,267
2007 5,291
2008 3,855
2009 1,889
2010 and beyond 446
Total 17,748
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[20] Advance payments, trade payables and securities issued
This item is analyzed by geographic area below:
The Rest of
[thousands of euro] Europe Asia Americas the world Total
Accounts payable 248,924 20,626 4,938 9,597 284,085
[21] Due to subsidiaries, associated companies and the parent company
Payables to the parent company Edizione Holding S.p.A., of 18,715 thousand euro, include:
_ trade payables due within twelve months of 51 thousand euro
_ payables due beyond the next twelve months of 18,664 thousand euro, relating to current
taxes calculated on the positive taxable results of some Group companies as provided by
the Rules for relationships between companies participating in a national fiscal consolidation;
these payables mature in 2006.
Amounts payable to non-consolidated subsidiaries of 2,684 thousand euro are of a financial
nature.
[22] Due to tax authorities
[thousands of euro] 12.31.2004 12.31.2003
Income taxes payable:
_ Italian companies 4,672 116,785
_ foreign companies 9,441 9,729
Total income taxes payable 14,113 126,514
VAT payable 11,361 7,642
Other amounts due to tax authorities 5,836 15,284
Total 31,310 149,440
Income taxes payable are stated net of deferred tax assets, all tax credits and withholding tax.
Tax payables in 2003 included substitute tax associated with the corporate reorganization fully
paid in 2004.
“Other amounts due to tax authorities” largely relates to payables for withholding tax. In 2003,
the balance consisted mainly of payables relating to the tax amnesty.
Due to social security and welfare institutions
This balance totals 9,210 thousand euro [8,931 thousand euro as of December 31, 2003] and
reflects both the Group company and employee contributions payable to these institutions at
year-end.

[23] Other payables
Other payables of 69,807 thousand euro include payables to employees for amounts due but
not paid of 18,065 thousand euro [15,561 thousand euro as of December 31, 2003], other
non-trade payables of 16,355 thousand euro [13,186 thousand euro as of December 31, 2003],
other payables for the purchase of fixed assets of 33,986 thousand euro [12,183 thousand
euro as of December 31, 2003], including 19,191 thousand euro due beyond twelve months
and differentials on forward transactions of 1,401 thousand euro [102 thousand euro as of
December 31, 2003].
“Other payables” include 745 thousand euro due beyond 12 months.
[24] Accrued expenses and deferred income
Miscellaneous expenses include accrued expenses for rent and leasing installments payable
of 3,798 thousand euro, compared with 3,686 thousand in the previous year.
Miscellaneous income includes deferred income relating to rental income of 986 thousand
euro, compared with 1,703 thousand euro in 2003.
[thousands of euro] 12.31.2004 12.31.2003
Accrued expenses:
_ financial expenses 9,396 10,801
_ miscellaneous expenses 5,756 4,983
Total accrued expenses 15,152 15,784
Deferred income:
_ financial income 885 149
_ miscellaneous income 2,441 3,147
Total deferred income 3,326 3,296
Total 18,478 19,080
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[25] Memorandum accounts
These mainly consist of currency to be sold or purchased forward. This is the countervalue in
euro at the forward exchange rate of commitments deriving from contracts signed for various
hedging transactions. The amount results in particular from the hedging of receivables, firm
orders and future sales, these latter subject to subsequent partial renegotiation by carrying
out reverse transactions. Other transactions were undertaken to hedge the exchange risk on
capital employed in some Group companies.
As of December 31, 2004, there were outstanding Interest Rate Swaps for a figurative value
of 240,000 thousand euro and 1 billion yen.
The fiduciary guarantees relate to guarantees given for the payment of rent and lease
installments in favor of third parties and relative to properties in Italy, Germany and England.
Purchase commitments relate to the purchase of a retail business.

Comments on principal items in the statement of income
Value of production
[26] Revenues from sales and services
[thousands of euro] 2004 2003
Sales of core products 1,607,183 1,773,260
Miscellaneous sales 45,767 50,725
Royalty income 14,419 12,862
Miscellaneous revenues 18,982 22,136
Total 1,686,351 1,858,983
Sales of core products are net of unconditional discounts.
Miscellaneous sales mainly relate to sports equipment produced for third parties by a Group
company.
Miscellaneous revenues mainly include the provision of services such as processing, cost
recoveries and miscellaneous services.
Revenues by geographic area and business sector
The Rest of
[thousands of euro] Europe % Americas % Asia % the world % Total
Casual 1,276,341 88.9 71,236 98.8 154,388 88.9 1,971 36.4 1,503,936
Sportswear and equipment 65,964 4.6 343 0.5 8,712 5.0 - - 75,019
Manufacturing and other 92,808 6.5 552 0.7 10,596 6.1 3,440 63.6 107,396
Total revenues 2004 1,435,113 100.0 72,131 100.0 173,696 100.0 5,411 100.0 1,686,351
Total revenues 2003 1,545,459 - 113,266 - 190,408 - 9,850 - 1,858,983
Group revenues reduced by 9.3% relating to various geographic areas. Please refer to the
comments in the Directors’ report.
Net sales of core products, by product category
[thousands of euro] 2004 2003
Casualwear, accessories and casual footwear 1,461,803 1,533,651
Sportswear 42,876 39,749
In-line skates and skateboards 537 58,323
Racquets - 20,664
Ski boots 4,632 4,967
Sports footwear - 4,480
Skis and snowboards 1,555 1,429
Fabrics and yarns 95,780 109,997
Total 1,607,183 1,773,260
For the trend of sales by product category, please refer to the breakdown provided in the
Directors’ report.
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Net sales of core products, by brand
[thousands of euro] 2004 2003
United Colors of Benetton 1,158,037 1,196,890
Sisley 303,766 336,761
Playlife 31,526 25,568
Killer Loop 11,348 13,776
Prince - 26,078
Nordica - 6,287
Rollerblade - 57,903
Other 102,506 109,997
Total 1,607,183 1,773,260
The United Colors of Benetton brand also includes sales of the UCB Bambino brand of
397,329 thousand euro and the The Hip Site brand of 3,092 thousand euro.
[27] Change in inventories
The change of this item is principally due to the increase in closing inventories of finished
products.
[28] Other revenues and income
[thousands of euro] 2004 2003
Reimbursements and compensation payments 4,837 4,251
Rental income 34,456 42,734
Gains on disposals of fixed assets 2,355 2,753
Other operating income 9,697 6,130
Total 51,345 55,868
“Rental income” refers mainly to income from premises to be used for the sale of Benettonlabel
products. The reduction compared with the previous year is the result of terminations
and renegotiations of rental contracts during the year.
Other operating income includes use of the reserve for legal risks by 2,749 thousand euro
following the favorable settlement of a dispute as well as of the reserve for doubtful debts
by 2,278 thousand euro, set up in previous years relative to a receivable claimed by the Efim
group in compulsory liquidation, based on the special laws on the subject, for the amount
liquidated.

Production costs
[29] Raw materials, other materials, consumables and goods for resale
[thousands of euro] 2004 2003
Raw materials, semi-manufactured and finished goods 436,494 468,313
Other materials 1,829 4,485
Purchases for advertising and promotion 881 1,036
Other purchases 13,078 13,285
[Discounts and rebates] [114] [71]
Total 452,168 487,048
[30] External services
[thousands of euro] 2004 2003
Subcontract work 361,917 373,685
Distribution and transport 29,829 31,485
Sales commission 73,564 82,523
Advertising and promotion 51,934 62,701
Other services 96,897 99,918
Emoluments to Directors and Statutory Auditors 6,438 7,455
Total 620,579 657,767
The reduction in sales commissions and advertising and promotion costs is mainly attributable
to the elimination of costs relating to the business sold.
Other services include energy costs of 24,243 thousand euro, maintenance costs of 12,342
thousand euro, consultancy and other fees of 47,117 thousand euro, insurance premiums of
4,277 thousand euro and personnel travel expenses of 8,918 thousand euro.
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Gross remuneration of any kind paid by the Benetton Group to Directors and members of the
Board of Statutory Auditors is shown below.
Name and surname Position covered Duration of office [1] Gross remuneration [•]
Luciano Benetton Chairman Year 2004 1,600
Carlo Benetton Deputy Chairman Year 2004 1,000
Silvano Cassano Managing Director Year 2004 1,219 [2]
Gilberto Benetton Director Year 2004 200
Giuliana Benetton Director Year 2004 1,000
Alessandro Benetton Director Year 2004 35
Reginald Bartholomew Director Year 2004 87
Luigi Arturo Bianchi Director Year 2004 87
Sergio De Simoi Director Year 2004 42
Gianni Mion Director Year 2004 42
Ulrich Weiss Director Year 2004 94
Angelo Casò Chairman of the Board of
Statutory Auditors Year 2004 62
Dino Sesani Auditor Year 2004 42
Filippo Duodo Auditor Year 2004 166
[1] Up to the approval of these financial statements.
[2] Including remuneration for employment.
[•] Thousands of euro.
During the year, the Managing Director Silvano Cassano was assigned 1,731,966 options which
grant the right to subscribe to the same number of Benetton Group S.p.A. shares at the price
of 8.984 euro per share. 50% of the options assigned may be exercised, subject to certain
conditions being satisfied, two years after the date of assignment. The remaining 50% may be
exercised, subject to certain conditions being satisfied, four years after the date of assignment.
The expiry of the period for exercise of the options is fixed at five years from the date on
which they became exercisable. More details about the stock option plan are provided in the
Directors’ report.
[31] Leases and rentals
“Leases and rentals”, of 89,728 thousand euro, relate mainly to rental costs of 79,232 thousand
euro.
[32] Payroll and related costs
These costs are already analyzed in the statement of income. The number of employees is
analyzed below, by category:
Average
[thousands of euro] 2004 2003 of the year
Managers 100 109 105
White collars 3,674 3,315 3,494
Workers 2,542 2,654 2,598
Part-time 1,108 871 990
Total 7,424 6,949 7,187

[33] Amortization, depreciation and write-downs
Amortization of intangible fixed assets
[thousands of euro] 2004 2003
Amortization of start-up and expansion expenses 3,495 3,507
Amortization of industrial patents and intellectual property rights 515 766
Amortization of concessions, licenses, trademarks and similar rights 3,968 5,043
Amortization of goodwill 10,979 9,972
Amortization of consolidation differences 1,111 1,911
Amortization relative to the purchase and development of software 6,059 5,337
Amortization of leasehold improvements 9,347 11,495
Amortization of other charges 5,420 4,885
Total 40,894 42,916
The change in amortization is principally due to lower amortization on “Leasehold
improvements” and “Concessions, licenses, trademarks and similar rights”.
Depreciation of tangible fixed assets
[thousands of euro] 2004 2003
Depreciation of real estate 17,173 17,828
Depreciation of plant and machinery 19,765 22,426
Depreciation of equipment 593 876
Depreciation of other assets 20,518 19,171
Depreciation of assets acquired under finance leases 622 440
Total 58,671 60,741
The changes in depreciation are principally due to disposals of plant and machinery during
the year.
Other write-downs of fixed assets. This balance, of 13,332 thousand euro, includes mainly the
adjustment to current market value of certain intangible fixed assets.
Write-downs of current receivables and of liquid funds. This item, amounting to 39,241 thousand
euro, relates to the prudent provision to the reserve for doubtful accounts. For further
comments, you are referred to the note on receivables in current assets.
[34] Provisions for risks and other provisions
This item, totaling 6,897 thousand euro, includes 4,510 thousand euro of provisions for future
risks and 2,365 thousand euro of provisions to the agents’ leaving indemnity reserve.
“Other provisions” amount to 25,668 thousand euro. For further details, please refer to the
comment under “Reserves for risks and charges” in the liabilities section of the notes to the
consolidated financial statements on the balance sheet.
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[35] Other operating costs
[thousands of euro] 2004 2003
Indirect taxation 7,980 6,786
Losses on disposal of fixed assets 2,997 3,634
Losses on receivables 560 4,425
Other general expenses 10,741 13,864
Total 22,278 28,709
“Losses on disposal of fixed assets” refer mainly to sale of plant and equipment relative to a
production company.
Other general expenses include charges of 2,806 thousand euro incurred for returns and
discounts on sales made in the previous year.
Financial income and expenses
Income from equity investments
This item amounts to 375 thousand euro [4,042 thousand euro in 2003 which included 3,647
thousand euro of tax credits on dividends by consolidated subsidiary companies, for the part
not compensated in taxes for the year].
[36] Other financial income
[thousands of euro] 2004 2003
From receivables held as financial fixed assets
from other companies 852 1,945
From securities included among current assets
not representing equity investments 1,099 795
Financial income other than the above:
_ interest income from subsidiary companies - 81
_ interest income from trade and other receivables 543 405
_ interest income from banks 3,875 2,291
_ miscellaneous financial income and income from derivatives 15,723 23,406
Total financial income other than the above 20,141 26,183
Total 22,092 28,923
“Miscellaneous financial income and income from derivatives” includes:
_ positive differentials on Interest Rate Swaps of 6,481 thousand euro
[12,212 thousand euro in 2003];
_ income from Currency Swaps and forward exchange contracts of 7,297 thousand euro
[10,547 thousand euro in 2003].

[37] Interest and other financial expenses
[thousands of euro] 2004 2003
Interest expenses on bonds 8,076 9,240
Interest expenses on bank current accounts 379 352
Interest expenses on advances against receivables 465 645
Interest expenses on short-term loans 531 369
Interest on medium/long-term bank loans 11,816 14,965
Interest expenses on loans from other lenders 814 939
Miscellaneous financial expenses and expenses on derivatives 26,550 38,257
Total 48,631 64,767
Miscellaneous financial expenses and expenses on derivatives mainly include:
_ negative differentials on Interest Rate Swaps of 14,497 thousand euro
[23,279 thousand euro in 2003];
_ income from Currency Swaps and forward exchange contracts of 7,099 thousand euro
[2,326 thousand euro in 2003];
_ discounts allowed for early settlement of trade receivables of 3,106 thousand euro
[4,618 thousand euro in 2003];
_ bank charges and commissions of 1,162 thousand euro
[1,454 thousand euro in 2003].
[38] Gains/[losses] on exchange rate differences
[thousands of euro] 2004 2003
Gains on exchange rate differences 93,536 141,354
Losses on exchange rate differences [93,422] [131,702]
Total 114 9,652
Concerning gains and losses on exchange, the changes introduced by the reform of company
law [D. Lgs. no. 6 of January 17, 2003 and subsequent amendments and additions] have been
adopted, showing on a single line in the statement of income, the net positive amount of gains
and losses on exchange, which, in the year to December 31, 2004, amounted to 114 thousand
euro. The corresponding value of gains on exchange in 2003, of 9,652 thousand euro, was
included in other financial income of 141,354 thousand euro and in interest and other financial
expenses for the amount of losses on exchange of 131,702 thousand euro.
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Extraordinary income and expenses
[39] Extraordinary income
[thousands of euro] 2004 2003
Gains on disposal of fixed assets 24,157 2,870
Other income:
_ out-of-period income 8,784 4,086
_ other extraordinary income 6,358 6,283
Total other income 15,142 10,369
Total 39,299 13,239
Gains on disposal of fixed assets in 2004 were made by the Spanish companies in the real
estate business, in particular, the gain results from sale of a property in Barcelona and the gain
from the sale of a production factory.
The out-of-period income includes the reversal of prior year taxes of 2,052 thousand euro,
collection of a receivable considered uncollectible of 2,373 thousand euro, and the elimination
of payables and other income relating to previous years.
Other extraordinary income includes use of the reserves for risks and charges by 3,864
thousand euro in the statement of income.
[40] Extraordinary expenses
[thousands of euro] 2004 2003
Losses on disposal of fixed assets 4,095 1,902
Taxes relating to prior years 642 10,916
Other expenses:
_ donations 2,307 2,890
_ out-of-period expenses 2,524 2,517
_ other extraordinary expenses 18,245 11,377
Total other expenses 23,076 16,784
Total 27,813 29,602
Other extraordinary expenses mainly include expenses associated with restructuring the sales
network and other expenses of a miscellaneous nature, such as lease early vacation incentives
and repayments and indemnities to third parties.
In 2003, “Taxes relating to prior years” included expenses relative to accepting the tax amnesty,
governed by Law no. 289 of December 27, 2002 and subsequent amendments.

[41] Taxes on income for the year, deferred income and expenses
[thousands of euro] 2004 2003
Current taxes 22,636 192,415
Deferred income:
_ reversal of intercompany profits 1,792 888
_ write-down of equity investments 8,036 [11,977]
_ provisions to write-down and risk reserves [6,311] 518
_ taxes on a different depreciation/amortization
basis of tangible and intangible fixed assets 12,850 [128,500]
_ losses 142 [738]
_ accumulated tax losses 52 5,789
_ others [3,512] [859]
Total deferred income 13,049 [134,879]
Deferred expenses:
_ reversal of excess depreciation and accounting for leases using the financing method 69 [3,020]
_ gains [1,866] 2,023
_ profits/reserves distributable by subsidiaries 7,957 -
_ others [91] [140]
Total deferred expenses 6,069 [1,137]
Net deferred tax [income]/expenses 19,118 [136,016]
Total 41,754 56,399
Taxes on 2003 income included 123,650 thousand euro of substitute tax on the Parent
Company’s gain resulting from the business transfer operation; 128,500 thousand euro of
deferred tax assets related to the operation just mentioned.
Reconciliation of the tax charge is as follows:
[in %] 2004 2003
Italian statutory tax rate 37.25 38.25
Effect of different taxation of subsidiaries making a profit [15.00] [7.01]
Effect of different taxation of subsidiaries making a loss 8.84 21.93
Deferred taxes on profits/reserves distributable by subsidiaries 4.84 -
Net effect deriving from the transfer of businesses [7.63] [5.37]
Amortization/reversal of excess cost
deriving from investments acquired 1.45 [0.10]
Tax benefit deriving from the write-down of equity investments
made in previous years [4,90] [17.45]
Effect on deferred taxes of the change in rate - 1.03
Higher incidence of IRAP 1.41 2.68
Other, net [0.85] 0.16
Effective tax rate in the financial statements 25.41 34.12
N OTES TO TH E C O N SO LI DATE D F I NANC IAL STATE M E NTS
99

AU D ITO R S' R E P O RT I N AC C O R DA N C E
100
Auditors’ report in accordance with article 156 of Law Decree
no. 58 dated 24 February 1998
To the Shareholders of Benetton Group S.p.A.
1. We have audited the consolidated financial statements of Benetton Group S.p.A. as of
31 December 2004. These consolidated financial statements are the responsibility of
Benetton Group S.p.A.’s directors. Our responsibility is to express an opinion on these
financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards and criteria
recommended by CONSOB. Those standards and criteria require that we plan and
perform the audit to obtain the necessary assurance about whether the consolidated
financial statements are free of material misstatement and, taken as a whole, are presented
fairly. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by the directors. We believe that our audit
provides a reasonable basis for our opinion.
For the opinion on the consolidated financial statements of the prior year, which are
presented for comparative purposes as required by law, reference is made to the report
issued by other auditors dated 31 March 2004.
3. In our opinion, the consolidated financial statements of Benetton Group S.p.A. as of
31 December 2004 comply with the laws governing the criteria for their preparation;
accordingly, they give a true and fair view of the financial position and of the results of
operations of the Group.
Treviso, 8 April 2005
PricewaterhouseCoopers S.p.A.
Signed by Roberto Adami [Partner]
This report has been translated into the English language solely for the convenience
of international readers.

Glossary

Style and Operations
Base collection
The base collection is the
fundamental part within each
collection [Spring Summer Autumn
Winter], the first one to be
designed and presented to clients.
The base collection includes both
basic and Benetton classic items
and fashion items which identify
the brand.
Commercial network
Benetton Group commercial
network includes stores mainly
managed by independent partners
for the distribution of Benetton
products in 120 countries.
The relationship with the partners
consists in the sale of goods and
the authorization to use the brand
name, free of charge, as signage in
the stores.
Delocalization of production
The production delocalization is
the process with which a company
transfers its production activities
or part of them from its country
of origin to different economic
contexts.
Years ago Benetton Group started
a process of delocalization of its
production from Italy to its own
production platforms, mainly in
Europe.
DOS
Acronym for Directly Operated
Stores, indicates stores that are
directly managed by the Benetton
Group rather than wholesale [sale
to independent partners who
manage Benetton stores].
Flash collection
The flash collection is a smaller
collection than the base collection
and with the main aim of
completing the base collection
with specific fashion themes and
presented after the base collection.
Integrations
Additions of product items not
included in the collection.
Lead Time
Time period from the collection
of the orders to the products
shipment.
Reassortments
Reassortments include
replenishments of products
included in the collection, mainly
in terms of colors and sizes.
Time to Market
Time period from the idea and
design of the products to the arrival
on the market [delivery to stores].
Administration and Finance
Dividend yield
Ratio between the last dividend
per share paid and the share price.
This ratio is used as immediate
expression of the stock return.
For Benetton Group dividend yield,
see Financial Highlights, where the
ratio is calculated as dividend paid
[accounted in the previous year]
and price at period end.
EBIT
The operating profitability is
represented by the item EBIT, in the
Profit and loss accounts reclassified
to cost of sales. EBIT is calculated
as Gross operating income net
of Selling, general, administrative
expenses and others.
EBITDA
Acronym of Earnings Before
Interests, Taxes, Depreciation and
Amortization.
EBITDA is used as measure of the
operating profitability before non
cash items and is calculated as EBIT,
amortization, depreciation and non
cash write offs.
EPS
Acronym of Earning Per Share. The
EPS indicates the ratio between
Net income/[loss] for the year
and number of shares outstanding.
The number of shares in Benetton
Group share capital is 181,558,811,
with par value of 1.30 euro each.
EV
Acronym of Enterprise Value, value
of the company: EV represents the
sum between market capitalization
and Net Financial Position.
EVA
Acronym of Economic Value
Added. The EVA is a measure of
the performance of the company
and is calculated as average NOPAT
multiplied by the difference
between the return on capital
employed [ROIC] and the average
cost of capital. [WACC].
Benetton Group uses EVA as
an absolute measure of the
Group performance, also for the
assignment of stock option to the
top management.
For Benetton Group Stock option
plan, see Corporate Governance.
Form 20 - F
According with US law, foreign
companies listed in the US file
with SEC [Securities and Exchange
Commission] the annual report
as “Form 20 – F”, which includes
fiscal year result and Shareholders’
equity reconciled with US GAAP
[acronym of Generally Accepted
Accounting Principles]. Benetton
Group has been listed at NYSE
since 1989 and file its annual report
yearly as Form 20 - F.
Free cash flow
Item of the statement of cash flow
which represents the sum of Net
cash flow from operating activities
and Capital expenditures.
Gross operating income
This item, in the profit and loss
account reclassified to cost of sales,
is equal to: Revenues net of Cost of
goods sold.
IAS / IFRS
Acronyms for International
Accounting Standards and
International Financial Reporting
Standards, respectively. From 2005
half-year report Benetton Group
will adopt the IAS as accounting
standards to report consolidated
financial statements.
Invested capital
Item of the balance sheet which
represents all the resources invested
in a company and includes: Working
capital, Tangible and intangible fixed
assets, Financial fixed assets and
Other activities/[liabilities].
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G LOSSA RY
104
Net Financial Position
Balance sheet item which
represents the Group net financial
position. It includes:
_ liabilities: Bank loans, Bonds,
Short-term loans, Medium and
long-term loans [current portion
and long-term portion] and lease
financing [current portion and longterm
portion];
_ assets: cash and banks,
marketable securities, differentials
on forward transactions, financial
receivable [current and noncurrent].
NOPAT
Acronym of Net Operating
Profit After Taxes. The NOPAT
is calculated as EBIT net of taxes
calculated on EBIT. NOPAT is used
to calculate EVA.
Pay Out
Ratio between dividends and
Net income/[loss]for the year
which represents the percentage
of net income distributed to the
shareholders as dividend.
Net revenues
This item, in the Profit and loss
accounts reclassified to cost of
sales, includes: Sales of core
products, Miscellaneous sales,
Royalty income and Miscellaneous
revenues.
ROE
Acronym of Return on Equity,
which represents the ratio between
Net income/[loss]for the year
and average Shareholders’ equity.
The ROE measures the return
on Shareholders’ equity after
remunerating the other sources of
capital and indicates the return for
the Shareholders.
ROIC
Acronym of Return On Invested
Capital, which represents the ratio
between Ebit and average Invested
capital. The ROIC measures the
return on the capital invested to
service both shareholders and
creditors.
General & structure expenses
This item, in the profit and loss
account reclassified to cost of
sales, includes: Payroll and related
cost, Advertising and promotion,
Depreciation and amortization,
Other operating expenses and
income, and provisions.
WACC
Acronym of Weighted Average
Cost of Capital, WACC represents
the average cost of the different
sources of capital of the company,
both as debt and equity. WACC is
commonly used as discount rate
for the operating cash flow of a
company and to calculate EVA.
Working capital
Item of the balance sheet which
represents the amount of capital
invested in the operating activities
of the company and includes: Net
trade receivables, Inventories and
Other credits/[debts] net of Trade
payables.
Market
ADR
Acronym of American Depositary
Receipt. The ADR is negotiable
certificate that represents
ownership of shares in a non-US
company. In 1989 Benetton Group
was listed on the New York Stock
Exchange, NYSE, through a Level
III Program. Each Benetton ADR
represents two Benetton ordinary
shares.
ADR –Level III Program
In 1989 Benetton Group was
listed on the New York Stock
Exchange, NYSE, through an ADR
issue structured as a Level III
Program: the ADR were distributed
through a public offering [with
capital issue] with a ratio of 1 ADR
corresponding to 2 ordinary shares,
were registered under the 1933
Securities Act and under the 1934
Exchange Act and were listed on
the NYSE. In addition, Benetton
Group provides a full reconciliation
of its annual report to US GAAP,
filing a Form 20 – F and meets the
NYSE listing requirements.
CUSPID
Acronym of Committee
on Uniform Securities and
Identification Procedures,
standards body which creates and
maintains a classification system for
securities. The Cuspid is a ninecharacter
number that uniquely
identifies a particular security in the
US. Benetton Group ADR CUSPID
is 081795403.
Free float
Free float identifies the percentage
of outstanding shares of a listed
company which are available for
negotiation, and are not under the
control of a strategic reference
shareholder.
Benetton Group free float includes
59,653,172 shares, equal to
32.856% of outstanding shares.
The remaining 67.144% is hold by
Edizione Holding S.p.A., holding
company, wholly owned by the
Benetton family.
ISIN
Acronym of International Securities
Identification Number, a unique
international code which identifies
a securities issue. Each country has
a national numbering agency which
assigns ISIN numbers for securities
in that country. Benetton ordinary
shares ISIN is IT0003106777.
Sedol
Acronym of Stock Exchange Daily
Official List number, a code used
by the London Stock Exchange to
identify foreign stocks [London
Stock Exchange]. Benetton Group
ordinary shares Sedol is 7128563,
while for Benetton Group ADR is
2091671.
Corporate Governance
Board of Directors
Main governing body for the
administration of a company.
The functionality of the Board
of Directors is disciplined by the
Statutory Report of the company
itself.
The Board of Directors of Benetton
is invested with the widest possible
powers for the ordinary and
extraordinary administration of the
Company. The Board of Directors
can delegate its powers to one or

more of the Directors who will
exercise them, jointly or severally,
in conformity with decisions taken
by the Board of Directors. The
Board of Directors may also entrust
part of its authority to an Executive
Committee made up of certain
Board members.
For information on Benetton
Board of Directors members, see
Corporate Governance.
Code of Ethics
Official document of the Company
and its subsidiaries, directly
or indirectly controlled. The
Code contains a set of principles
according to which the Company
conducts its activity and that of the
parties who operate on its behalf.
For Benetton Code of Ethics, see
Corporate Governance.
Corporate Governance
Set of rules and relations referring
to the company administration,
ownership structure and
management efficiency to reach the
company targets.
For information on Benetton
Corporate Governance, see
Corporate Governance.
Executive Committee
Governing body for the
administration of a company.
Benetton Executive Committee
was set up in 2003 to ease and
quicken the decisional processes of
the Group. One of the Executive
Committee’s tasks is to define,
upon proposal by the Managing
Director, company and group
industrial and financial plans,
strategies, the annual budget and
interim adjustments for subsequent
submittal to the Board of Directors.
The Executive Committee
also examines and approves
particularly important investment
and disinvestment plans, lines of
credit facilities, the furnishing of
guarantees and analyses the chief
problems connected with company
performance, so that the Board of
Directors can accomplish its legal
duties more efficiently.
For information on Benetton
Executive Committee members,
see Corporate Governance.
Statutory Auditors
Internal body of a company, which
is responsible for the control of the
company management activities.
The Statutory Auditors monitor the
compliance of the other governing
bodies, in particular the Board of
Directors, with the law and the
statutory report. Benetton Board
of Statutory Auditors consists of
three standing members and two
alternate members, who can be
re-appointed. The members remain
in office for three financial years to
the date of the General Meeting for
the approval of the latest financial
year results.
For information on Benetton
Statutory Auditors members, see
Corporate Governance.
Stock option
Right for the option beneficiary
to subscribe a certain number
of shares per option, at a
predetermined price [exercise
price] at or by a certain date
[Vesting period].
In September 2004, Benetton
Board of Directors, in application
of the powers authorized by the
Extraordinary Shareholders’
Meeting, approved a capital
increase to service a Stock option
plan for Benetton top management,
subject to achievement of
the objectives for creation of
accumulated value envisaged in the
2004-2007 Guidelines.
For information on Benetton
Group Stock Option Plan, see
Corporate Governance.
Stock Option Plan
Document which rules the award of
stock options for the subscription
of shares at a predetermined price
[exercise price] at or by a certain
date [Vesting period].
In September 2004, Benetton
Board of Directors, in application
of the powers authorized by the
Extraordinary Shareholders’
Meeting, approved a capital
increase to service a Stock option
plan for Benetton top management,
subject to achievement of
the objectives for creation of
accumulated value envisaged in the
2004-2007 Guidelines.
For information on Benetton
Group Stock Option Plan, see
Corporate Governance.
Vesting Period
Time period before stock options
become exercisable and the
underlying stocks can be acquired
by the beneficiary according to a
certain stock option plan.
According to Benetton Stock
Option Plan approved in
September 2004 the vesting period
for the top management options
on Benetton stocks is equal to 2
years after award date for 50% of
the assigned options and 4 years
for the remaining 50%, subject
to achievement of objectives for
creation of accumulated value.
For information on Benetton
Group Stock Option Plan, see
Corporate Governance.
G LOSSA RY
105

2005 financial calendar
Date
2005 Shareholders’ meeting 05.16.2005
2005 1st quarter results 05.16.2005
Dividend payment 05.23.2005
2005 1st half results 09.12.2005
2005 9 months results 11.11.2005
20 0 5 F I NANC IAL C A LE N DA R
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C O R P O R ATE I N F O R MATION
108
Corporate information
Headquarters
Benetton Group S.p.A.
Villa Minelli
31050 Ponzano Veneto [Treviso] - Italy
tel +39 0422 519111
Legal data
Share Capital: Euro 236,026,454.30 fully paid-in
R.E.A. [register of Commerce] no.: 84146
Tax ID/Treviso Company Register no.: 00193320264
Media & communications department
e-mail: press@benetton.it
tel +39 0422 519036
fax +39 0422 519930
Investor Relations
e-mail: investor@benetton.it
tel +39 0422 519412
fax +39 0422 519740
TV Conference +39 0422 510623/24/25
www.benettongroup.com
Graphic design and photo Fabrica - Catena di Villorba - Treviso
Consultancy & co-ordination Ergon Comunicazione - Rome
Films Sartori Group - Quinto - Treviso
Printed in Italy Grafiche Tintoretto - Treviso