The Benetton Group Annual Report 1996

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Differentials on forward transactions During 1996, as in prior years, the parent company sold forward the proceeds of future sales in order to optimize the management of exchange risk. In particular, forward contracts and other currency hedges have been put in place with maturities in 1997 and 1998. The value of these commitments, including the positions opened in 1995, is reflected among the "Commitments, contingencies and memorandum accounts". Part of these contracts, totaling Lire 1,332 billion, were subsequently renegotiated and the related positive differentials amounting to Lire 68,759 million are recorded within "Other financial income". Lire 65,491 million of such gains will be collected in 1997 and Lire 3,268 million in 1998. The residual balance, Lire 6,244 million, reflects the differentials emerging from similar positions opened in 1995, which will be collected in 1997. Such differentials, being highly liquid, are classified among current assets. 12. Liquid funds This caption consists of: 12-31-1995 12-31-1996 Current account deposits (Lire) 35,586 56,880 Current account deposits (foreign currency) 157,262 151,504 Time deposits (Lire) 150,414 182,694 Time deposits (foreign currency) 86,805 93,992 Checks 28,011 13,148 Banknotes and coins 541 694 Total 458,619 498,912 Average interest rates reflect market returns for the various currencies concerned. The balances as of December 31 reflect temporary high liquidity due to significant year-end receipts from customers. 13. ACCRUED INCOME AND PREPAID EXPENSES This caption is analyzed as follows: Accrued income: 12-31-1995 12-31-1996 - financial income 33,900 36,525 - other income 3,041 527 Total accrued income Prepaid expenses: 36,941 37,052 - financial charges 5,175 17,992 - rentals and leasing charges 4,028 4,104 - advertising and sponsorships 2,748 1,414 - other expenses 4,138 3,087 Total prepaid expenses 16,089 26,597 Total 53,030 63,649 Accrued financial income mainly relates to interest deriving from temporary investments. Prepaid financial charges mainly relate to deferred charges arising from the valuation by Benetton International N.V. of warrants attached to the Lire 200,000 million bond.
COMMENTS ON THE PRINCIPAL LIABILITY AND EQUITY CAPTIONS (in millions of Lire) STOCKHOLDERS' EQUITY 14. Capital stock The capital stock of Benetton Group S.p.A. is represented by 174,553,725 issued and fully-paid ordinary shares, par value Lire 500 each. The 1980 spinoff 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. Capital stock, issued and fully-paid, amounts to Lire 87,276,862,500. 15. Additional paid-in capital This caption is unchanged with respect to the prior year. 16. Revaluation reserves This caption reflects the residual amount of revaluation reserves established in accordance with the provisions of Law 72 of March 19, 1983, together with the net surplus following the revaluation in accordance with Law 413/91 of December 30, 1991, and the monetary revaluation of tangible fixed assets by a Spanish subsidiary, in accordance with local legislation (Royal Decree 2607/96). Taxation has not been provided in respect of these reserves or of those capitalized, since, at this time, the conditions which would give rise to such taxation are not expected to occur. 17. Legal reserve This caption is unchanged with respect to the prior year. 18. Reserve for treasury shares held This balance, Lire 719 million, derives from the reclassification pursuant to article 2357-ter of the Italian Civil Code of part of the extraordinary reserve, following the 1996 acquisition of treasury shares during the year by Benetton Group S.p.A.. 19. Other reserves As of December 31, 1996, this caption amounts to Lire 950,880 million (Lire 814,282 million as of December 31, 1995) and includes: – Lire 174,877 million relating to other reserves of the parent company (Lire 112,947 million as of December 31, 1995); – Lire 6,947 million relating to the cumulative translation adjustment generated by translating the foreign currency financial statements of companies consolidated on a line-by-line basis; – Lire 769,056 million representing the additional equity of consolidated companies with respect to their carrying value, together with other consolidation entries. The first of the schedules which follow reconciles the stockholders' equity and net income of Benetton Group S.p.A. with the corresponding consolidated amounts; the second lists the equity in consolidated subsidiaries attributable to minority stockholders.
Page 1: The Benetton Group Annual Report 19
Page 5: Dear Shareholders, in 1996 the Bene
Page 8 and 9: Manufacturing companies invested su
Page 11: Signori Azionisti, nell’esercizio
Page 14 and 15: Gli investimenti I programmi di inn
Page 17 and 18: Consolidated financial statements a
Page 19: The Benetton Group The Benetton Gro
Page 23 and 24: Management’s discussion and analy
Page 25: Net capital employed Net working ca
Page 28 and 29: Consolidated balance sheet as of De
Page 30 and 31: Consolidated balance sheet as of De
Page 32 and 33: Consolidated statements of income f
Page 34 and 35: Statement of changes in consolidate
Page 36 and 37: Statements of consolidated cash flo
Page 38 and 39: NOTES TO THE CONSOLIDATED FINANCIAL
Page 40 and 41: 4. Accounting policies The accounti
Page 42 and 43: Reserve for employee termination in
Page 44 and 45: OTHER INFORMATION 5. Purchase of su
Page 46 and 47: COMMENTS ON THE PRINCIPAL ASSET CAP
Page 48 and 49: 8. Financial fixed assets Equity in
Page 50 and 51: CURRENT ASSETS 9. Inventories Inven
Page 54 and 55: Reconciliation of the stockholders'
Page 56 and 57: 20. RESERVES FOR RISKS AND CHARGES
Page 58 and 59: 22. ACCOUNTS PAYABLE The compositio
Page 60 and 61: Due to other providers of finance A
Page 62 and 63: 23. ACCRUED EXPENSES AND DEFERRED I
Page 64 and 65: Sales of core products, by business
Page 66 and 67: Writedowns The "Writedown of curren
Page 68 and 69: Expense This caption includes: 1995
Page 70 and 71: As those proceedings continue, a se
Page 72 and 73: Generally accepted US accounting pr
Page 74 and 75: The following tables summarize the
Page 76 and 77: Differences which do not have an ef
Page 78 and 79: Companies and Groups included withi
Page 80 and 81: Consolidated balance sheets as of A
Page 82 and 83: Consolidated statements of income f
Page 84 and 85: REPORT OF THE BOARD OF STATUTORY AU
Page 87: Information for Stockholders Inform

The Benetton Group Annual Report 1996

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