2004 Annual Report - Benetton Group

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].
G LOSSA RY
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