Relazione sull'andamento

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

 

For the month of November, 2004

 

Benetton Group S.p.A.

(Exact name of Registrant)

 

Via Villa Minelli, 1 - 31050 Ponzano Veneto, Treviso - ITALY

(Address of principal executive offices)

 

(Indicate by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F)

Form 20-F X Form 40-F ______

 

(Indicate by check mark whether the Registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934).

 

Yes ______ No X

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Benetton Group S.p.A.

By: /s/ Luciano Benetton

______________________

Name: Luciano Benetton

Title: Chairman

 

 

 

 

 

Dated: November 28, 2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benetton Group

Results at September 30, 2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benetton Group S.p.A.

Villa Minelli

Ponzano Veneto (Treviso) - Italy

Share Capital: euro 236,026,454.30 fully paid-in

Tax ID/Treviso Company register: 00193320264

 

 

Index

The Benetton Group

3

Directors and other officers

4

Financial highlights

5

Directors' report

Results for the first nine months of 2004

Principal organizational and corporate changes

6

Outlook for the full year

7

Consolidated financial statements and relevant comments

Explanatory notes

8

Group consolidated results

- Consolidated statements of income reclassified to cost of sales

10

- First nine months of 2004

13

- Third quarter of 2004

15

- Consolidated balance sheets reclassified according to financial criteria

17

- Financial situation - highlights

19

- Summary statement of cash flows

The Benetton Group

Directors and other officers

Board of Directors

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

Board of Statutory Auditors

Angelo Casò

Chairman

Filippo Duodo

Auditors

Dino Sesani

Antonio Cortellazzo

Alternate Auditors

Marco Leotta

Independent Auditors

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 for some categories of action.

(2) Power to carry out any action that is consistent with the ordinary administration of the Company as well as certain acts of extraordinary administration, subject to limits.

 

Financial highlights

Nine months

Nine months

Year

Key operating data (millions of euro)

2004

%

2003

%

Change

%

2003

%

Revenues

1,241

100.0

1,382

100.0

(141)

(10.2)

1,859

100.0

Cost of sales

693

55.8

785

56.8

(92)

(11.7)

1,049

56.4

Gross operating income

548

44.2

597

43.2

(49)

(8.2)

810

43.6

Income from operations

160

12.9

175

12.7

(15)

(8.3)

232

12.5

Ordinary income

144

11.6

160

11.6

(16)

(9.8)

210

11.3

Net income

100

8.1

77

5.5

23

30.5

108

5.8

 

Key financial data (millions of euro)

09.30.2004

12.31.2003

09.30.2003

Working capital

878

729

908

Assets due to be sold

-

8

9

Net capital employed

1,798

1,655

1,818

Net financial position

585

468

659

Shareholders' equity

1,207

1,174

1,144

Self-financing

212

327

232

Capital expenditures in tangible and intangible fixed assets

69

151

112

 

Share and market data

09.30.2004

12.31.2003

09.30.2003

Shareholders' equity per share (euro)

6.65

6.47

6.30

Period end share price (euro)

9.70

9.11

9.04

Screen-based market: high (euro)

10.18

11.30

9.91

Screen-based market: low (euro)

8.33

5.90

5.90

Market capitalization (thousands of euro)

1,760,757

1,654,001

1,641,292

Average no. of shares outstanding (1)

181,558,811

181,558,811

181,558,811

Number of shares outstanding

181,558,811

181,558,811

181,558,811

 

Employees

09.30.2004

12.31.2003

09.30.2003

Total number

7,481

6,949

6,875

 

(1) Net of treasury shares held during the period.

Directors' report

Results for the first nine months of 2004

Principal organizational and corporate changes

The branches of Bencom S.r.l. in Spain, France and Great Britain became operational in January 2004 and, in June, a branch was formed in Belgium (which became operational on August 1). Via these local organizations, Bencom S.r.l. now directly manages in the above Nations a number of Benetton stores that were previously attached to Benetton Retail Spain S.L., Benetton Retail France S.A.S. and Benetton Retail (1988) Ltd.

Benetton Group S.p.A., through the subsidiary Benfin S.p.A., has acquired the 15% minority interest in Olimpias S.p.A. for 15 million euro, payable in two instalments of 7.5 million euro each by, respectively, June 30, 2004, and June 30, 2005. This manufacturing and services company is active in the textiles and clothing field, mainly for the Benetton Group, through many factories located in Italy. The merger by incorporation of Olimpias S.p.A. by Benfin S.p.A. has also been approved as part of, and consistent with, the more general reorganization of the Group carried out, for the most part, in 2003.

The German company New Ben GmbH, a 51% subsidiary, signed an agreement for the purchase of the entire shareholding in Mari Textilhandels GmbH, a German company which owns around 30 stores devoted to the sale of products carrying brands owned by the Group in the areas of Bavaria, Hesse, Rheinland-Pfalz and Saarland. This acquisition, approved by the Benetton Group S.p.A. Board of Directors and by the Monitoring Authority for Competition and the German Market, was agreed with an effective date of July 1, 2004 and a price of 4 million euro. Independent experts carried out a "due diligence" on the company and agreed to the appropriateness of the price agreed between the parties. In July, members increased the share capital of New Ben GmbH in proportion to shares held, paying in 4 million euro. The merger by incorporation of the subsidiary Mari GmbH into New Ben GmbH then took place, with retroactive effect from July 1, 2004.

The plan for restructuring companies in Spain and Portugal was completed, with the sale of the holding in Benetton Textil Spain S.L. (subsequently named Benetton Real Estate Spain S.L.) by Benetton International N.V. S.A. to Benetton Realty Spain S.L.

Benetton Realty Spain S.L. sold its holding in Benetton Realty Portugal Imobiliaria S.A. to Benetton Real Estate International S.A.

Benetton Real Estate Spain S.L. sold its holding in Benetton Textil - Confecçao de Têxteis S.A. to Benetton Manufacturing Holding N.V.

Benetton Retail International S.A. sold its holding in Benetton Asia Pacific Ltd. to Benetton International N.V. S.A.

Benetton Retail France S.A.S. sold its entire shareholding in the French company L'Apollinaire S.n.c., owner of a commercial business, to third parties.

In the third quarter, the company Italian Marketing International S.r.l. was merged by incorporation into Bencom S.r.l. The merger has legal effect from September 1, 2004 and accounting and tax effect from January 1, 2004.

In September, Benetton Group S.p.A. sold its entire holding of 10% in the share capital of Tecnica S.p.A. to third parties.

Benetton Retail Belgique S.A. changed its company name to Benetton Real Estate Belgique S.A.

On November 3, the shareholding in Benetton Retail France S.A.S. (now Benetton France Commercial S.A.S.) was sold by Benetton Retail International S.A. to Benetton France Trading S.à r.l. (subsequently named Benetton France S.à r.l.).

Outlook for the full year

Based on information currently to hand, the Group confirms that consolidated net income for 2004 will range from 120 to 125 million euro. Sales of the casual sector, which represent about 90% of the total, are forecast to be down by around 3.5% in the face of persistent caution in demand and the resultant impacts on both autumn reorders and the 2005 spring-summer collections.

Consolidated turnover to the end of 2004, which excludes the sale of the sports equipment sector that occurred in the previous financial year, is estimated at around 1,700 million euro.

Cash flow generated by normal operations is forecast to improve compared with previous estimates and 2003 values; this should allow net financial position at the end of 2004 to be maintained at a steady level compared with December 31, 2003, in spite of the significant impact of the payment of substitute tax relative to the company restructuring plan.

Consolidated financial

Explanatory notes

statements and relevant The quarterly report has been prepared in accordance with art. 82 of the Regulation approved by Consob

comments resolution 11971 of May 14, 1999 in application of Legislative Decree 58 of February 24, 1998 concerning issuers.

The accounting policies and consolidation principles adopted are consistent with those used to prepare the annual consolidated financial statements.

The consolidated statements of income for the third quarter and for the first nine months, and the consolidated balance sheet as of September 30, 2004 are shown in the same format as those presented in the 2003 Directors' report.

The consolidation area has remained substantially unchanged compared with September 30, 2003 and December 31, 2003. Bear in mind that the Nordica, Prince and Rollerblade businesses were all sold off during the first half of 2003.

  

Group consolidated results

Consolidated statements of income reclassified to cost of sales adopted for internal reporting purposes

Nine months

Nine months

(thousands of euro)

2004

%

2003

%

Change

%

Revenues

1,241,322

100.0

1,382,037

100.0

(140,715)

(10.2)

Cost of sales

Material and net change in inventories

334,371

26.9

409,462

29.7

(75,091)

(18.3)

Payroll and related costs

65,245

5.2

69,404

5.0

(4,159)

(6.0)

Subcontract work

246,614

19.9

255,877

18.5

(9,263)

(3.6)

Industrial depreciation

15,695

1.3

18,079

1.3

(2,384)

(13.2)

Other manufacturing costs

30,967

2.5

32,121

2.3

(1,154)

(3.6)

692,892

55.8

784,943

56.8

(92,051)

(11.7)

Gross operating income

548,430

44.2

597,094

43.2

(48,664)

(8.2)

Selling, general and administrative expenses

Payroll and related cost

90,439

7.3

89,821

6.5

618

0.7

Distribution and transport

21,316

1.7

23,398

1.7

(2,082)

(8.9)

Sales commissions

55,481

4.5

61,257

4.4

(5,776)

(9.4)

Advertising and promotion

40,650

3.3

56,152

4.1

(15,502)

(27.6)

Depreciation and amortization

58,815

4.7

57,018

4.1

1,797

3.2

Other expenses

121,487

9.8

134,540

9.7

(13,053)

(9.7)

388,188

31.3

422,186

30.5

(33,998)

(8.1)

Income from operations

160,242

12.9

174,908

12.7

(14,666)

(8.3)

Other income/(expenses)

Foreign currency gain/(loss), net

1,508

0.1

9,579

0.7

(8,071)

(84.3)

Interest income

16,452

1.4

23,177

1.7

(6,725)

(29.0)

Interest expenses

(34,186)

(2.8)

(48,027)

(3.5)

13,841

(28.4)

Other income /(expenses), net

(12,424)

(1.0)

(30,577)

(2.3)

18,153

(59.4)

(28,650)

(2.3)

(45,848)

(3.4)

17,198

(37.5)

Income before taxes

and minority interests

131,592

10.6

129,060

9.3

2,532

2.0

Income taxes

33,338

2.7

51,560

3.7

(18,222)

(35.3)

Income before minority interests

98,254

7.9

77,500

5.6

20,754

26.8

Minority interests (gain)/loss

1,788

0.2

(865)

(0.1)

2,653

n.s.

Net income

100,042

8.1

76,635

5.5

23,407

30.5

 

Consolidated statements of income reclassified to cost of sales adopted for internal reporting purposes

3rd quarter

3rd quarter

(thousands of euro)

2004

%

2003

%

Change

%

Revenues

388,544

100.0

412,847

100.0

(24,303)

(5.9)

Cost of sales

Material and net change in inventories

108,617

28.0

132,054

32.0

(23,437)

(17.7)

Payroll and related costs

18,710

4.8

20,233

4.9

(1,523)

(7.5)

Subcontract work

71,296

18.4

63,997

15.5

7,299

(11.4)

Industrial depreciation

4,422

1.1

5,448

1.3

(1,026)

(18.8)

Other manufacturing costs

9,811

2.5

9,275

2.3

536

5.8

212,856

54.8

231,007

56.0

(18,151)

(7.9)

Gross operating income

175,688

45.2

181,840

44.0

(6,152)

(3.4)

Selling, general and administrative expenses

Payroll and related cost

29,319

7.6

26,366

6.4

2,953

11.2

Distribution and transport

6,732

1.7

8,310

2.0

(1,578)

(19.0)

Sales commissions

16,795

4.3

18,346

4.4

(1,551)

(8.4)

Advertising and promotion

12,620

3.2

13,226

3.2

(606)

(4.6)

Depreciation and amortization

20,859

5.4

17,982

4.3

2,877

16.0

Other expenses

40,072

10.3

52,353

12.7

(12,281)

(23.5)

126,397

32.5

136,583

33.0

(10,186)

(7.5)

Income from operations

49,291

12.7

45,257

11.0

4,034

8.9

Other income/(expenses)

Foreign currency gain/(loss), net

392

0.1

(407)

(0.1)

799

n.s.

Interest income

4,917

1.3

6,819

1.6

(1,902)

(27.9)

Interest expenses

(11,052)

(2.8)

(14,528)

(3.5)

3,476

(23.9)

Other income /(expenses), net

(1,025)

(0.3)

(3,482)

(0.8)

2,457

(70.6)

(6,768)

(1.7)

(11,598)

(2.8)

4,830

(41.7)

Income before taxes

and minority interests

42,523

11.0

33,659

8.2

8,864

26.3

Income taxes

10,266

2.6

7,278

1.8

2,988

41.1

Income before minority interests

32,256

8.4

26,381

6.4

5,875

22.3

Minority interests (gain)/loss

1,155

0.2

(234)

(0.1)

1,389

n.s

Net income

33,412

8.6

26,147

6.3

7,265

27.8

First nine months of 2004

Revenues in the first nine months amounted to 1,241 million euro compared with 1,382 million euro in the corresponding period of 2003. To assist comparison, the following factors are highlighted: sale of the sports equipment business in the first half of 2003 and the continuing adverse impact of leading foreign currency exchange rates. The decrease in sales attributable to the business sold amounted to about 88 million, while the effect of exchange rates on turnover for the period was over 12 million euro. Casual sector sales, net of the exchange rate effect, reduced by 2.6%, in spite of a 1.5% increase in the number of garments.

The net reduction in sports sector sales amounted to 86 million euro and derived from the impact of the sale of the sports equipment business, partially offset by sales of sportswear, which increased by 2 million euro.

The manufacturing sector was penalised by the market situation, with a reduction of over 12 million euro, equivalent to 13.4%.

Consolidated cost of sales decreased both in absolute terms, by 92 million euro, and as a percentage of revenues, to 55.8% compared with 56.8% in the first nine months of 2003, in particular due to the absence of costs relative to the business sold and greater production and logistics efficiency in the clothing sector.

Group gross operating income was 548 million euro, with a percentage of revenues of 44.2% compared with 43.2%, increasing the percentage of sales compared with the corresponding period of 2003 by a percentage point. In absolute terms, the reduction was over 48 million euro, around 32 million attributable to the business sold and around 13 million to the casual sector. Other sectors decreased both in absolute terms and as a percentage of sales.

Selling, general and administrative expenses of 388 million euro, 31.3% of revenues, reduced by 8.1%, equivalent to 34 million euro; this change was mainly attributable to the business sold. Costs of distribution, transport and commissions maintained the same percentage of revenues as in the first nine months of 2003. Advertising costs, of 41 million, were down in absolute terms by over 15 million euro, in the casual and the disposed of sports equipment sectors. Depreciation, amortization and payroll costs, which were slightly up, were particularly affected by initiatives undertaken for the sales network. Other costs and expenses reduced by around 13 million, mainly due to the impact of lower accruals, the percentage of the reserve to cover risks in commercial receivables, however, rising to over 10.5% (9.4% at September 30, 2003).

Consolidated income from operations was 160 million euro compared with 175 million for the first nine months of 2003, while the percentage of revenues improved slightly to 12.9% compared with 12.7% in the corresponding period of 2003. The reduction in absolute value was mainly due to initiatives undertaken in support of the sales network. Movements in foreign currency rates had an adverse impact of around 4 million euro.

The result of foreign exchange management was 2 million euro, compared with 10 million in the corresponding comparative period, affected by the slight recovery in exchange rates during the period.

Net financial charges, of 18 million euro, were 7 million down compared with the first nine months of 2003; this was mainly due to the reduction in average financial position; the lower cost of funds also favourably influenced this change.

Ordinary income was 144 million euro compared with around 160 million in the same period of 2003. The percentage of Group net turnover was unchanged at 11.6%.

The amount of other and non-recurring costs, of around 13 million euro, mainly including adjustment to current values of some assets relating to sales activities and capital gains realised in the third quarter, was significantly lower compared with 31 million euro in the first nine months of 2003, also reflecting the expense of the tax amnesty for Italian companies.

Net income for the period was 100 million euro compared with 77 million in the same period of 2003, equivalent to 8.1% of net revenues compared with 5.5%.

The

Other

Nine months

Nine months

Change

(millions of euro)

Europe

%

Americas

%

Asia

%

Areas

%

2004

2003

%

Casual

930

88.3

58

99.9

114

90.5

1

25.0

1,103

1,146

(3.7)

Sportswear

and equipment

54

5.2

0

-

4

3.2

-

-

59

145

(59.5)

Manufacturing and others

68

6.5

0

0.1

8

6.3

3

75.0

79

91

(13.4)

Total nine months 2004

1,052

100.0

59

100.0

126

100.0

4

100.0

1,241

1,382

(10.2)

Total nine months 2003

1,134

97

145

6

1,382

From the year 2004, the geographic breakdown has been revised, replacing the "Euro area" with "Europe".

The business sectors are as follows:

- the casual sector, 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;

- the sportswear and equipment sector, with the Playlife and Killer Loop brands; includes sales of equipment produced for third parties by a manufacturing company within the Group. The 2003 comparative amounts include the sales of sports equipment branded Nordica, Rollerblade and Prince;

- the manufacturing and others sector, including sales of raw materials, semi-finished products, industrial services and revenues and expenses from real estate activity.

Nine months

Nine months

(millions of euro)

2004

%

2003

%

Change

%

Sector total revenues

1,103

100.0

1,146

100.0

(43)

(3.7)

Cost of sales

(584)

(52.9)

(613)

(53.5)

29

4.8

Gross operating income

519

47.1

533

46.5

(14)

(2.4)

Selling, general and administrative expenses

(365)

(33.2)

(363)

(31.7)

(2)

0.8

Income from operations

154

13.9

170

14.8

(16)

(9.4)

Revenues for the sector were 1,103 million euro against 1,146 million for the first nine months of 2003, with a percentage reduction of 3.7%. The adverse exchange rate impact on casual revenues was over 12 million euro. The number of garments sold increased by 1.5%, with a slow-down in the third quarter due to the cautious trend of autumn collection reorders.

Cost of sales was 29 million euro, 4.8% down compared with the corresponding period, and with an improved percentage of revenues, which moved from 53.5% to 52.9% due to even more efficient rationalisation of production and logistics. Gross operating income was 519 million euro, equivalent to 47.1% compared with 46.5% in the same period of 2003, although feeling the effect of exchange which had an adverse impact of 7 million euro.

General expenses and operating overheads increased, especially due to the impact of actions for development of the sales network.

Income from operations was 154 million euro, representing 13.9% of revenues.

 

 

Nine months

Nine months

(millions of euro)

2004

%

2003

%

Change

%

Sector total revenues

59

100.0

145

100.0

(86)

(59.5)

Cost of sales

(43)

(72.7)

(98)

(67.6)

55

56.4

Gross operating income

16

27.3

47

32.4

(31)

(65.8)

Selling, general and administrative expenses

(12)

(20.1)

(46)

(31.7)

34

(74.2)

Income from operations

4

7.2

1

0.7

3

n.s.

The sports sector for the first nine months of 2003 still included sales of sports equipment. The change in revenues attributable to this business, between the two periods being compared, amounted to around 88 million euro, while sales of sportswear were 38 million euro. The cost of sales was 55 million euro down; this decrease was totally attributable to the sale of the sector.

Income from operations benefited from the absence of depreciation and amortization, as well as other selling and general expenses and operating overheads associated with the sports equipment business. Income from operations increased with the percentage of revenues growing from 0.7% to 7.2%.

Nine months

Nine months

(millions of euro)

2004

%

2003

%

Change

%

Sector total revenues

79

100.0

91

100.0

(12)

(13.4)

Cost of sales

(66)

(83.6)

(73)

(80.5)

7

10.1

Gross operating income

13

16.4

18

19.5

(5)

(27.0)

Selling, general and administrative expenses

(11)

(13.4)

(14)

(14.7)

3

(20.7)

Income from operations

2

3.0

4

4.8

(2)

(46.1)

Sales to third parties by the manufacturing sector went down by 13.4% from 91 million euro to 79 million. This movement resulted from a contraction of the market for fabrics and yarns. The gross operating income was 16.4% of revenues against 19.5% in the comparative period. Income from operations fell significantly compared with that for the first nine months of 2003.

 

Third quarter of 2004

Revenues in the period were over 388 million euro, compared with 413 million in the corresponding period of the previous year, with a change of 24 million euro. Gross operating income was 176 million euro, equivalent to 45.2% of revenues, improving the percentage of sales compared with 44% in the corresponding period of 2003.

Total selling, general and administrative expenses, of 126 million euro, were better than in the third quarter of 2003, with a reduction of 7.5%.

Income from operations as a percentage of revenues increased significantly to 12.7% compared with 11% in the third quarter of 2003.

Net financial charges were down in absolute terms by around 1.6 million euro, primarily due to the effect of reduced average financial position in the period.

Net income for the quarter was around 33 million euro, up by more than 7 million euro compared with the same period of 2003.

The

Other

Nine months

Nine months

Change

(millions of euro)

Europe

%

Americas

%

Asia

%

Areas

%

2004

2003

%

Casual

283

88.2

21

100.0

41

91.1

0

-

345

363

(4.9)

Sportswear

and equipment

21

6.5

0

-

2

4.4

-

-

24

25

(7.2)

Manufacturing and others

17

5.3

0

-

2

4.5

1

100.0

20

25

(18.7)

Total third quarter 2004

321

100.0

21

100.0

45

100.0

1

100.0

389

413

(5.9)

Total third quarter 2003

340

23

48

2

413

Third quarter

Third quarter

(millions of euro)

2004

%

2003

%

Change

%

Sector total revenues

345

100.0

363

100.0

(18)

(4.9)

Cost of sales

(179)

(51.8)

(193)

(53.1)

14

7.2

Gross operating income

166

48.2

170

46.9

(4)

(2.3)

Selling, general and administrative expenses

(119)

(34.6)

(126)

(34.7)

7

(5.2)

Income from operations

47

13.6

44

12.2

3

5.8

Casual sector sales for the third quarter were 345 million euro compared with 363 million in the corresponding period of 2003, with a reduction of 4.9%. The adverse effects of exchange were felt, amounting to around 4 million, and also of caution in placing reorders for the autumn collection.

The gross operating income amounted to 166 million euro, compared with 170 million euro in the same period of 2003, with an improvement in the percentage of revenues from 46.9% to 48,2% due to more efficient rationalisation of production and logistics.

Income from operations was 47 million, increasing from 12.2% of revenues to 13.6%. This change resulted primarily from the reduction in variable costs of sale and lower accruals made in the quarter; the percentage of the reserve for risks in total commercial receivables rose, however, to 10.5%, compared with 9.4% at September 30, 2003.

Third quarter

Third quarter

(millions of euro)

2004

%

2003

%

Change

%

Sector total revenues

24

100.0

26

100.0

(2)

(7.2)

Cost of sales

(18)

(74.9)

(19)

(72.2)

1

3.7

Gross operating income

6

25.1

7

27.8

(1)

(16.4)

Selling, general and administrative expenses

(4)

(15.7)

(8)

(30.8)

4

(52.6)

Income from operations

2

9.4

(1)

(3.0)

3

392.1

The reduction in revenues was attributable to the sportswear segment, whereas that relating to general expenses related to the equipment segment.

Third quarter

Third quarter

(millions of euro)

2004

%

2003

%

Change

%

Sector total revenues

20

100.0

25

100.0

(5)

(18.7)

Cost of sales

(16)

(82.4)

(20)

(81.5)

4

17.9

Gross operating income

4

17.6

5

18.5

(1)

(22.4)

Selling, general and administrative expenses

(4)

(16.4)

(3)

(11.4)

(1)

17.6

Income from operations

(0)

1.2

2

7.1

(2)

(86.1)

 

Consolidated balance sheets reclassified according to financial criteria

(thousands of euro)

Assets

09.30.2004

12.31.2003

09.30.2003

Current assets

Cash and banks

193,971

324,835

123,799

Marketable securities

27,667

27,289

27,084

Differentials on forward transactions

7,026

10,000

10,497

Financial receivables

9,495

7,298

10,708

238,159

369,422

172,088

Accounts receivable

Trade receivables

892,110

848,508

974,043

Other receivables

277,458

297,220

170,591

less - Allowance for doubtful accounts

(94,616)

(95,870)

(91,828)

1,074,952

1,049,858

1,052,806

Assets due to be sold

-

8,088

8,722

Inventories

267,595

233,736

258,968

Accrued income and prepaid expenses

17,939

15,842

23,347

285,534

257,666

291,037

Total current assets

1,598,645

1,676,946

1,515,931

Investments and other non-current assets

Equity investments

2,771

20,514

16,996

Securities held as fixed assets

-

9

10

Guarantee deposits

16,615

15,832

16,436

Financial receivables

30,586

30,615

34,338

Other non-current receivables

6,427

8,662

6,919

Total investments and other non-current assets

56,399

75,632

74,699

Tangible fixed assets

Real estate

637,904

641,966

633,362

Plant, machinery and equipment

331,219

327,409

331,443

Office furniture, furnishings and electronic equipment

113,461

100,269

97,902

Vehicles and aircraft

22,633

22,817

36,287

Construction in progress and advances for tangible fixed assets

19,011

17,019

13,818

Finance leases

13,338

13,913

14,344

less - Accumulated depreciation

(437,811)

(409,553)

(411,978)

Total tangible fixed assets

699,754

713,840

715,178

Intangible fixed assets

Licenses, trademarks and industrial patents

25,606

28,225

26,592

Deferred charges

182,362

202,800

210,855

Total intangible fixed assets

207,968

231,025

237,447

TOTAL ASSETS

2,562,766

2,697,443

2,543,255

 

(thousands of euro)

Liabilities and Shareholders' equity

09.30.2004

12.31.2003

09.30.2003

Current liabilities

Bank loans

23,444

33,879

20,363

Short-term loans

2,912

1,339

13,056

Current portion of long-term loans

301,105

1,567

1,567

Current portion of lease financing

5,944

4,977

4,934

Accounts payable

299,157

331,563

295,811

Other payables, accrued expenses and deferred income

70,785

91,364

104,049

Reserve for income taxes

35,964

126,514

21,574

Total current liabilities

739,311

591,203

461,354

Long-term liabilities

Bonds

-

300,000

300,000

Long-term loans,

net of current portion

501,180

502,269

502,287

Other long-term liabilities

536

3,330

7,725

Lease financing

19,274

21,834

23,102

Reserve for employee termination indemnities

50,863

49,774

49,919

Other reserves

39,222

42,373

40,006

Total long-term liabilities

611,075

919,580

923,039

Minority interests in consolidated subsidiaries

5,539

12,799

14,744

Shareholders' equity

Share capital

236,026

236,026

236,026

Additional paid-in capital

56,574

56,574

56,574

Surplus from monetary revaluation of assets

22,059

22,058

22,058

Other reserves and retained earnings

790,209

762,986

762,985

Translation differences

1,931

(11,657)

(10,160)

Net income for the period

100,042

107,874

76,635

Total Shareholders' equity

1,206,841

1,173,861

1,144,118

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

2,562,766

2,697,443

2,543,255

 

Financial situation - highlights deduced from internal reporting

(millions of euro)

09.30.2004

12.31.2003

Change

09.30.2003

Working capital

878

729

148

908

Asset due to be sold

-

8

(8)

9

Total capital employed

1,798

1,655

143

1,818

Net financial position

585

468

117

659

Shareholders' equity

1,207

1,174

33

1,144

Minority interests

6

13

(7)

15

The change in working capital compared with the position at September 30, 2003, was mainly due to improvement in the management of commercial credit.

Compared with December 31, 2003, capital invested increased by 143 million euro due to the following factors:

- increase in working capital of 148 million euro following the normal cycle of the business;

- increase in tangible and intangible fixed assets through capital expenditure of 69 million euro;

- decrease in disposals of 26 million euro, mainly tangible fixed assets;

- depreciation and amortization of 75 million euro;

- value adjustments of 12 million euro;

- reduction in financial fixed assets of 44 million euro;

- changes in operating and tax reserves of 83 million euro.

Changes in the financial position with comparative figures for last year are summarized below:

(millions of euro)

09.30.2004

12.31.2003

Change

09.30.2003

Current financial assets:

- Italian government securities and monetary and bond funds

27

27

-

27

- bank deposits

87

207

(120)

23

- cash and ordinary current accounts

107

118

(11)

101

- other short-term financial receivables

17

17

-

21

Total current financial assets

238

369

(131)

172

Medium-term financial receivables

31

31

-

34

Total financial assets

269

400

(131)

206

Current financial liabilities:

- short-term financial payables

(26)

(35)

9

(33)

- current portion of bond loan

(300)

-

(300)

-

- current portion of medium-term debt

(1)

(2)

1

(2)

- current portion of amounts due to leasing companies

(6)

(5)

(1)

(5)

Total current financial liabilities

(333)

(42)

(291)

(40)

Medium-term financial payables:

- bond loan

-

(300)

300

(300)

- syndicated loan

(500)

(500)

-

(500)

- other medium-term loans

(2)

(4)

2

(2)

- due to leasing companies

(19)

(22)

3

(23)

Total medium-term financial payables

(521)

(826)

305

(825)

Total financial liabilities

(854)

(868)

14

(865)

Net financial position

(585)

(468)

(117)

(659)

Net short-term financial position

(95)

327

(422)

132

Net medium-term financial position

(490)

(795)

305

(791)

Net financial position

(585)

(468)

(117)

(659)

The main change in the short-term financial position, compared with pervious periods, was inclusion of the debenture loan which matures on July 26, 2005.

Summary statement of cash flows

Nine months

Nine months

Year

(millions of euro)

2004

2003

2003

Self-financing

212

232

327

Change in working capital

(135)

(163)

(4)

Payment of taxes

(17)

(42)

(71)

Net operating assets

(16)

(91)

(126)

Change in financial fixed assets

(20)

(1)

(4)

Free cash flow

24

(65)

122

Payment of dividends

(69)

(64)

(64)

Payment of substitute tax

(125)

-

-

Net sports equipment disposal

49

81

81

Net financial (deficit)/surplus

(121)

(48)

139

Self-financing generated by the Group as of September 30, 2004 was 212 million euro compared with 232 million in the first nine months of 2003.

Free cash flow generated by normal operations, before distribution of dividends, non-recurring cash flows relating to sale of the sports equipment business and payment of substitute tax, improved significantly to 24 million euro from 65 million negative in the first nine months of 2003.

The payment of substitute tax associated with the company restructuring operation was particularly significant.

The cash flow relative to the disposal of the sports equipment business refers to the receipt of a term deposit, the sale of a building by an American subsidiary and the sale of the 10% shareholding in Tecnica S.p.A.

 

 

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: 00193320264

Media & communication 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