FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Pursuant to Rule 13a-16 or 15d-16 of
Report of Foreign Issuer
the Securities Exchange Act of 1934

For the month of April 2004

GUCCI GROUP N.V.

Rembrandt Tower

Amstelplein 1

1096 HA Amsterdam

The Netherlands

(Exact name of registrant and address of principal executive offices)

[Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.]

Form 20-F ý Form40-F o

[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 o No ý

[If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):]

Enclosure: Press Release dated April 19, 2004

GUCCI GROUP N.V. - Consolidated statements of income

(In thousands of Euro, except per share and share amounts)

	2003		2002		*2001()**

Net revenues	2,587,390		2,544,286		2,565,116
Cost of goods sold	851,984		802,007		773,399
Gross profit	1,735,406		1,742,279		1,791,717
Selling, general and administrative expenses	1,463,026		1,433,276		1,393,123
Restructuring expenses	27,008		3,144		—
Goodwill and trademark amortization	125,575		126,418		130,209
Operating profit	119,797		179,441		268,385
Restructuring expenses	—		—		(750	)
Financial income, net	11,881		62,796		88,123
Other income (expenses), net	13,695		(1,257	)	10,586
Income before income taxes and minority interests	145,373		240,980		367,844
Income tax expense (benefit)	(22,115	)	19,286		58,679
Net income before minority interests	167,488		221,694		309,165
Minority interests	6,759		5,060		3,370
Net income for the year	174,247		226,754		312,535
Net income per share of common stock – basic	1.75		2.24		3.12
Weighted average number of shares – basic	99,518,957		101,060,751		100,174,358
Net income per share of common stock – diluted	1.73		2.21		3.08
Weighted average number of shares and share equivalents – diluted	100,697,227		102,422,918		101,524,040

(*) The Euro amounts have been calculated from previously published US Dollar amounts in accordance with the criteria disclosed in Note 3 to these consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

GUCCI GROUP N.V. - Consolidated balance sheets

(In thousands of Euro)

	2003		2002
Assets
Current assets
Cash and cash equivalents	1,270,748		2,782,588
Short-term financial assets	380,091		—
Trade receivables, net	352,525		331,834
Inventories, net	495,655		472,028
Current value of hedge derivatives	70,790		110,559
Other current assets	276,462		326,186
Total current assets	2,846,271		4,023,195
Non-current assets
Long-term financial assets	17,446		408,079
Property, plant and equipment, net	941,272		912,497
Goodwill, trademarks, other intangible assets and deferred charges, net	1,976,339		2,110,015
Deferred tax assets	289,996		263,671
Other non-current assets	104,905		63,150
Total non-current assets	3,329,958		3,757,412
Total assets	6,176,229		7,780,607
Liabilities and shareholders’ equity
Current liabilities
Bank overdrafts and short-term loans	423,687		630,534
Trade payables and accrued expenses	473,248		478,479
Tax liabilities and income tax payable	93,968		143,857
Other current liabilities	91,892		119,262
Total current liabilities	1,082,795		1,372,132
Non-current liabilities
Long-term financial payables	1,318,292		1,202,411
Pension liabilities and severance indemnities	55,124		50,831
Long-term tax payable and deferred tax liabilities	339,195		381,052
Other long-term liabilities	25,181		38,182
Total non-current liabilities	1,737,792		1,672,476
Total liabilities	2,820,587		3,044,608
Minority interests	41,714		64,566
Shareholders’ equity
Share capital	106,159		104,688
Contributed surplus	1,478,543		2,790,401
Retained earnings	1,145,388		968,745
Treasury stock, at cost	(261,328	)	(173,274	)
Accumulated other comprehensive income	670,919		754,119
Net result for the year	174,247		226,754
Shareholders’ equity	3,313,928		4,671,433
Total liabilities, minority interests and shareholders’ equity	6,176,229		7,780,607

The accompanying notes are an integral part of these consolidated financial statements.

GUCCI GROUP N.V. - Consolidated statements of cash flows

(In thousands of Euro)

	2003		2002		*2001()**

Cash flow provided by operating activities
Net result for the year	174,247		226,754		312,535
Depreciation	102,077		93,950		77,094
Amortization	149,177		148,525		145,585
Net loss (gain) on sale and write-down of non-current assets	16,722		(28	)	2
Changes (net of acquisitions) in:
trade receivables, net	(29,192	)	(27,872	)	(24,215	)
inventories, net	(33,907	)	(43,333	)	(80,368	)
other current assets	53,657		(45,014	)	(54,855	)
trade payables and accrued expenses	4,354		36,870		(34,209	)
income tax payable	(62,717	)	(20,161	)	18,417
other current liabilities	(24,455	)	(27,879	)	(44,477	)
deferred tax	(62,134	)	(72,132	)	(63,412	)
other non-current assets	(6,612	)	(13,126	)	(7,882	)
other non-current liabilities	(21,059	)	(9,218	)	(15,369	)
Cash flow provided by operating activities	260,158		247,336		228,846
Cash flow used in investing activities
Acquisitions	(10,286	)	(24,875	)	(220,264	)
Acquisition of minority interest in Sergio Rossi	(41,058	)	—		—
Purchases of tangible assets	(195,129	)	(255,578	)	(245,869	)
Increase in deferred charges and intangible assets	(20,925	)	(85,077	)	(96,081	)
Proceeds from the sale of non-current assets	—		2,987		10,100
Cash flow used in investing activities	(267,398	)	(362,543	)	(552,114	)
Cash flow (used in) provided by financing activities
Issuance (repayment) of long-term debt, net	168,391		384,891		(173,031	)
Proceeds from the sale of long-term financial assets	28,167		—		—
Changes in financial assets	(45,990	)	(151,990	)	—
Investment in long-term financial assets	—		—		(299,419	)
Purchases of treasury shares	(281,573	)	(158,499	)	—
Proceeds from the exercise of stock options and other movements	227,693		41,749		27,869
Return of capital to shareholders	(1,347,005	)	—		—
Dividends	(49,797	)	(50,709	)	(425,243	)
Cash flow (used in) provided by financing activities	(1,300,114	)	65,442		(869,824	)
Increase (decrease) in cash, net of short-term financial indebtedness	(1,307,354	)	(49,765	)	(1,193,092	)
Effect of exchange rates on cash (short-term financial indebtedness), net:
Exchange effects arising from translation	2,361		4,984		(35,118	)
Exchange effects arising from change to Euro			—		206,510
Cash (short-term financial indebtedness) from acquired companies, net	—		(2,914	)	(8,297	)
Cash and cash equivalents, net of short-term financial indebtedness, at the beginning of the year	2,152,054		2,199,749		3,229,746
Cash and cash equivalents, net of short-term financial indebtedness, at the end of the year	847,061		2,152,054		2,199,749

	2003		2002		*2001()**

Cash and cash equivalents, net of short-term financial indebtedness, comprise the following:
Cash and cash equivalents	1,270,748		2,782,588		2,964,907
Bank overdrafts and short-term loans	(423,687	)	(630,534	)	(765,158	)
Cash and cash equivalents, net	847,061		2,152,054		2,199,749

Supplemental disclosures of cash flow information:

	2003	2002	*2001()**
Cash paid during the period:
Interest expense	77,128	52,161	68,788
Income taxes	89,759	121,157	106,508
Cash flow from interest received	83,705	122,274	163,055

Assets and liabilities in the businesses acquired were as follows:

	2003		2002		2001

Fixed assets	1,286		743		16,205
Assets under capital lease	2,566		—		—
Trade receivables	—		5,691		19,287
Inventories	2,007		1,675		7,717
Trade payables	(2,100	)	(2,857	)	(22,894	)
Other liabilities, net	1,591		(3,205	)	(49,038	)
Cash (short-term indebtedness), net	—		(2,914	)	(8,297	)
Financial payables	(3,023	)	—		(2,805	)
Effects of changes in exchange rates	(293	)	616		4,693
	2,034		(251	)	(35,132	)
Goodwill and trademarks, net of deferred taxes	12,229		29,721		281,073
Cost of acquisitions	14,263		29,470		245,941
Amount paid during the year	10,286		24,875		220,264
Amount paid in prior year	3,977		—		—
Amount to be paid as at the year end	—		4,595		25,677

(*) The Cash flows were converted from US Dollar to Euro using the average exchange rate of 2001 except for cash

and cash equivalents amounts which were converted from US Dollar to Euro using the historical exchange rate at the

end of 2001.

The accompanying notes are an integral part of these consolidated financial statements.

GUCCI GROUP N.V. - Statement of changes in consolidated shareholders’ equity and comprehensive income

(In thousands of Euro *, except number of shares)

	Number of shares		Share capital		Contributed surplus		Retained earnings		Treasury stock, at cost		Accumulated other comprehensive income		Net result for the year		Total

Balance at January 31, 2001	100,095,205		103,654		2,792,130		763,548		(90,890	)	490,531		366,925		4,425,898
Appropriation of result for 2000	—		—		—		312,225		—		—		(312,225	)	—
Dividends	—		—		—		(364,480	)	—		—		(58,959	)	(423,439	)
Shares released from treasury for options exercise	612,475		—		2,997		—		30,028		—		—		33,025
Other	14,723		—		242		(2,852	)	720		256		—		(1,634	)
Net income for 2001	—		—		—		—		—		—		312,535		312,535
Other comprehensive income:
- Hedging reserve:
Opening	—		—		—		(926	)	—		9,359		—		8,433
Movements	—		—		—		—		—		(16,918	)	—		(16,918	)
- Fair-value reserve	—		—		—		—		—		(2,388	)	—		(2,388	)
- Foreign currency adjustments (net of tax of € (1.1) million)	—		—		—		—		—		(104,733	)	—		(104,733	)
Total other comprehensive income	—		—		—		(926	)	—		(114,680	)	—		(115,606	)
Comprehensive income	—		—		—		—		—		—		—		196,929
Exchange effects arising from change to Euro	—		—		—		—		—		323,385		4,259		327,644
Balance at January 31, 2002	100,722,403		103,654		2,795,369		707,515		(60,142	)	699,492		312,535		4,558,423
Appropriation of result for 2001	—		—		—		261,826		—		—		(261,826	)	—
Dividends	—		—		—		—		—		—		(50,709	)	(50,709	)
Shares issued for option exercise	7,940		8		394		—		—		—		—		402
Shares released from treasury for options exercise	1,294,274		—		(3,458	)	—		44,747		—		—		41,289
Shares repurchased	(1,800,595	)	—		—		—		(158,499	)	—		—		(158,499	)
Other	11,229		1,026		(1,904	)	(596	)	620		—		—		(854	)
Net income for 2002	—		—		—		—		—		—		226,754		226,754
Other comprehensive income:
- Hedging reserve (net of tax of € 5.2 million)	—		—		—		—		—		106,581		—		106,581
- Fair-value reserve	—		—		—		—		—		5,207		—		5,207
- Foreign currency adjustments (net of tax of € 7.7 million)	—		—		—		—		—		(57,161	)	—		(57,161	)
Total other comprehensive income	—		—		—		—		—		54,627		—		54,627
Comprehensive income	—		—		—		—		—		—		—		281,381
Balance at January 31, 2003	100,235,251		104,688		2,790,401		968,745		(173,274	)	754,119		226,754		4,671,433
Share capital increase	—		1,387,116		(1,387,116	)	—		—		—		—		—
Return of capital to shareholder	—		(1,387,116	)	40,111	(**)	—		—		—		—		(1,347,005	)
Appropriation of result for 2002	—		—		—		176,957		—		—		(176,957	)	—
Dividends	—		—		—		—		—		—		(49,797	)	(49,797	)
Shares repurchased	(3,203,987	)	—		—		—		(281,573	)	—		—		(281,573	)
Shares issued for option exercise	1,442,455		1,471		56,987		—		—		—		—		58,458
Shares released from treasury for options exercise	2,579,114		—		(24,206	)	—		193,441		—		—		169,235
Other	54,088		—		2,366		(314	)	78		—		—		2,130
Net income for 2003	—		—		—		—		—		—		174,247		174,247
Other comprehensive income:
- Hedging reserve (net of tax of € 1.5 million)	—		—		—		—		—		(31,572	)	—		(31,572	)
- Fair-value reserve	—		—		—		—		—		(853	)	—		(853	)
- Foreign currency adjustments (net of tax of € 2.5 million)	—		—		—		—		—		(50,775	)	—		(50,775	)
Total other comprehensive income	—		—		—		—		—		(83,200	)	—		(83,200	)
Comprehensive income	—		—		—		—		—		—		—		91,047
Balance at January 31, 2004	101,106,921		106,159		1,478,543		1,145,388		(261,328	)	670,919		174,247		3,313,928

(*) The Euro amounts as at January 31, 2002 have been calculated from previously published US Dollar amounts as follows:

• “Share capital” and related movements by multiplying the number of shares issued by the nominal value of € 1.01;

• Balances other than “Share capital” as the aggregate amount of:

• The balances as at January 31, 1999 translated using the exchange rate at that date, and

• The movements recorded during the period from February 1, 1999 up to January 31, 2002 calculated as follows:

• “Net income of the period” using the respective period average exchange rate,

• “Shares issued to PPR” on March 19, 1999 using the exchange rate on that date,

• “Appropriation of the result” using the prior period average exchange rate,

• “Dividends” using the exchange rate on the due date of the respective payments,

• all other movements using each period’s average exchange rate.

(**) This amount relates to the portion of return of capital relevant the Treasury stock.

The accompanying notes are an integral part of these financial statements.

GUCCI GROUP N.V. - Notes to the consolidated financial statements

(1) Activities of the Group

Gucci Group is one of the world’s leading multi-brand luxury goods companies. Through the Gucci, Yves Saint Laurent, Sergio Rossi, Boucheron, Roger & Gallet, Bottega Veneta, Bédat & Co, Alexander McQueen, Stella McCartney and Balenciaga brands, the Group designs, produces and distributes high-quality personal luxury goods, including ready-to-wear, handbags, luggage, small leather goods, shoes, timepieces, jewelry, ties and scarves, eye-wear, perfume, cosmetics and skincare products. The Group directly operates stores in major markets throughout the world and also distributes products to franchise stores, duty-free boutiques and leading department and specialty stores. The shares of Gucci Group are listed on the Euronext Amsterdam Stock Exchange (GCCI.AS) and on the New York Stock Exchange (GUC).

(2) Acquisitions

During the year ended January 31, 2004 the Group made a number of immaterial acquisitions including an Italian shoe production facility, the quota held by the minority shareholder in the Joint Venture established in the past in Singapore and Malaysia as well as the establishment of a Joint Venture in UK with a former supplier of services for a total consideration of € 14.3 million.

During the year ended January 31, 2003 the Group made a number of immaterial acquisitions including Italian shoe and jewelry production facilities as well as the quota held by the minority shareholder in the Joint Venture established in the past in Taiwan for a total consideration of € 29.5 million.

The acquisitions have been accounted for utilizing the purchase method and, accordingly, the operating results of the new businesses have been included in the consolidated statements of income from the date of the acquisition. The purchase prices of the acquired companies have been preliminarily allocated to identified assets and liabilities of these companies based on their estimated fair values on the date of the acquisition. The residual amount, of € 12.2 and € 29.7 million, as of January 31, 2004 and January 31, 2003, respectively, has been recorded as goodwill, which will be amortized over 20 years.

In January 2004 the Group acquired the 30% minority interest of Sergio Rossi S.p.A and Sergio Rossi International S.A.R.L for a total consideration of € 41.1 million. The sellers have retained the right to dividends and voting powers with respect to the sold stock until January 31, 2007 and have a call option - the right to repurchase a 28.5% interest - on that date. Based on the fact that the sellers retained all economic rights in respect of the shares, the 30% interest has been reflected as a minority interest while the payment of € 41.1 million has been included in “Other non-current assets”.

(3) Summary of significant accounting policies

The Group’s accounting policies comply with standards set forth by the International Accounting Standards Board.

The following is a summary of the significant accounting policies used by the Group to prepare the financial statements.

Basis of preparation

The consolidated financial statements have been prepared under the historical cost convention except as disclosed in the accounting principles below.

Reporting currency

Starting from February 1, 2002, the Group adopted the Euro as its reporting currency.

The 2001 comparative balances previously reported in prior period US Dollar denominated consolidated financial statements have been translated by applying the following criteria:

• equity items have been translated following the criteria disclosed in the notes to the Statement of changes in consolidated shareholders’ equity and comprehensive income;

• income statement items have been translated by applying the exchange rate that approximates the average €/US$ exchange rate during 2001 (€/US$ 0.8908);

• exchange differences resulting from this translation have been recognized directly in equity as a movement of the “Accumulated other comprehensive income” reserve;

• consolidated statements of cash flows have been translated by applying the exchange rate that approximates the average € /US$ exchange rate for the relevant period.

Consequently, the 2001 consolidated financial statements show the same trends and ratios as previously reported.

Foreign currency transactions and balances

Foreign currency transactions are translated into Euro using the exchange rates prevailing at the dates of transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies, are recognized in the income statement, except when deferred in equity as qualifying cash flow hedges.

Translation differences on debt securities and other monetary financial assets measured at fair value are included in foreign exchange gains and losses. Translation differences on non-monetary items such as equities held for trading are reported as part of their fair value gain or loss. Translation differences on available -for sale equities are included in equity.

Principles of consolidation

Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of acquisition is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus costs directly attributable to the acquisition. The excess of cost of acquisition over the fair value of the net assets of the subsidiary acquired is recorded as goodwill.

The assets, liabilities and equity of consolidated companies are added together on a line-by-line basis, eliminating the book value of the related investment against the Group’s share of equity.

In the case of subsidiaries not 100% owned, the Group recognizes a minority interest consisting of the portion of net income and net assets attributable to the interest owned by third parties.

All significant inter-company balances, transactions and unrealized profits and losses are eliminated.

The balance sheets of subsidiaries denominated in foreign currencies are translated into Euro using year-end exchange rates, while average exchange rates for the year are used for the translation of the statements of income and cash flows. Significant individual transactions are translated at the rate of exchange prevailing on the date of the transaction. Translation gains and losses, including the differences arising as a result of translating opening shareholders’ equity using exchange rates at the close of the period or on the date of acquisition for foreign companies acquired during the year rather than exchange rates at the beginning of the period, are reported as a separate component of shareholders’ equity.

Any goodwill arising on the acquisition of a foreign entity and any fair value adjustments to the carrying amount of the assets and liabilities arising on the acquisition of that foreign entity are translated using the closing exchange rate.

Cash flow statement

The cash flow statement has been prepared applying the indirect method. The cash and cash equivalents in the cash flow statement comprise the balance sheet item cash at banks and in hand and the bank overdrafts and short-term loans forming part of the current liabilities. Cash flows in foreign currencies

have been translated at estimated average exchange rates. Income and expenses in respect of interest, dividends received and taxation on profits are included in the cash flow from operating activities.

Cash and cash equivalents

The Group considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The investments included in cash and cash equivalents are reported at their fair market value.

Receivables and payables

Receivables and payables are stated at nominal value. Receivables are reduced to their expected realizable value by an allowance for doubtful accounts. Receivables and payables denominated in foreign currencies are stated at the year-end exchange rates. The resulting gains or losses are recorded in the consolidated statements of income, with the exception of the gains or losses resulting from the translation of inter-company long-term loans, which are considered to form part of the net investment in the related subsidiaries or for which settlement is not planned or anticipated in the foreseeable future. The impact of translation of these items has been reflected in Foreign currency adjustments (see Note 14).

Inventories

Inventories are stated at the lower of purchase or production cost or market value. Purchase or production cost is determined under the retail method for retail inventories and average cost method for production and wholesale inventories.

Under the retail inventory method, the valuation of inventories at cost and the resulting gross margins are determined by applying a calculated cost-to-retail ratio, for various groupings of similar items, to the retail value of inventories. Consequently, the cost of the inventory reflected on the consolidated balance sheet is decreased by charges to cost of sales during the period that it is first determined that the merchandise will be sold at mark-down value.

Property, plant and equipment

Property, plant and equipment are carried at historical cost. Depreciation is calculated on a straight-line basis over the estimated useful lives of the fixed assets or the term of the lease.

The applicable depreciation rates are as follows:

Buildings	2% - 6	%
Plant and production equipment	7% - 18	%
Furniture and fixtures	10% - 20	%
Leasehold improvements and general store equipment	Expected lease term
Electronic office machines	10% - 22	%

Land is not depreciated.

When property is retired or otherwise disposed, the cost and related depreciation are removed from the financial statements and any related gains or losses are included in income.

The cost of major renovations is included in the carrying amount of the assets when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related assets.

Leases

Leases of property, plant and equipment, where the Group has substantially all the risk and rewards of ownership, are classified as finance leases. Finance leases are capitalized at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate of financial charge on the balance outstanding. The corresponding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance cost is charged to the income statement over the lease period. Property, plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset or the lease term.

Goodwill, trademarks, other intangible assets and deferred charges

Goodwill is recorded as the difference between the purchase price and the fair value of the identifiable net assets of acquired businesses at the date of acquisition and is expensed over its estimated useful life up to a maximum period of 20 years using the straight-line method of amortization. When the acquisition agreement provides for an adjustment to the purchase consideration contingent on future events, an estimate of the adjustment is included in the cost of acquisition. Any future adjustment of the estimate is recorded as an adjustment of the goodwill.

Acquired trademarks are amortized over their estimated useful life up to a maximum period of 20 years. Acquired trademarks, whose useful lives are estimated to be greater than 20 years, are amortized over 20 years, the maximum period permitted by IAS.

Other intangible assets and deferred charges expected to benefit future periods are recorded at cost. Amortization is calculated on a straight-line basis over the estimated benefit period.

The applicable amortization rates are as follows:

Commercial leases and licenses	expected lease or license term
Software	20	%
Licenses repurchased	contractual expiring date of the license
Miscellaneous deferred charges and intangible assets	20	%

Impairment of long-lived assets

Property, plant and equipment and other non-current assets, including goodwill, trademarks and other intangible assets are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets whose carrying values exceed their recoverable amount are written down to the higher of the net selling price and the amount determined using discounted net future cash flows expected to be generated by the asset.

Pension liabilities and severance indemnities

Pension liabilities and severance indemnities are calculated on an actuarial basis or in accordance with applicable local law to the extent that the amount of the liability does not differ materially from the amount which would have been calculated on an actuarial basis.

The Group’s contributions to defined contribution pension plans are charged to the income statement in the period to which the contributions relate.

Derivative financial instruments

The Group enters into derivative financial transactions as hedges. The related financial instruments are initially recognized in the balance sheet at cost and subsequently are remeasured periodically at their fair value. The accounting treatment of the changes in fair value depends on whether the hedging instrument is designated as a hedge of recognized assets or liabilities (“Fair value hedge”) or as a hedge of forecasted transactions (“Cash flow hedge”). Changes in fair values of derivatives that are designated as Fair value hedges and that are highly effective are recorded in the income statement, along with any changes in fair value of the hedged asset or liability that are attributable to the hedged risk. Changes in the fair value of derivatives that are designated and qualify as Cash flow hedges and that are highly effective are deferred in the equity account, “Hedging reserve”. Amounts deferred in the “Hedging reserve” and any subsequent changes in the value of the derivatives are recorded in the income statement in the same period and classified in the same income statement accounts as the related hedged transactions.

If a hedging instrument designated as a Cash flow hedge is sold or terminated prior to maturity, any related gains or losses continue to be deferred until the hedged transaction occurs. If the forecasted transaction is no longer expected to take place the derivative instrument ceases to meet the criteria for designation as a Cash flow hedge. Accordingly as soon as this event occurs, any gains or losses arising from changes in fair value are recognized in income. At the inception of hedging transactions, the Group documents the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking hedge transactions. This process includes linking all derivatives designated as hedges to specific assets and liabilities or to specific forecasted transactions as well as measuring at the hedge inception and on an on-going basis the degree of effectiveness of the hedging instruments in offsetting changes in fair value or cash flows of the hedged items.

All outstanding derivatives at January 31, 2004 and 2003 qualified for hedge accounting.

The fair value of the hedging instruments is estimated by reputable financial institutions on the basis of market conditions.

Financial assets

The Company owns financial assets, which it intends to hold to maturity. However, they may be sold in response to liquidity requirements or changes in interest rates. Accordingly, they are classified as “Available-for-sale”.

All purchases and sales of financial assets are recognized on the trade date, which is the date that the Company commits to purchase or sell the asset. Financial assets are carried at fair value. Realized and unrealized gains and losses arising from changes in the fair value are recognized directly in the equity account, “Fair value reserve”, until the financial asset is sold, redeemed, or otherwise disposed of, or until the financial asset is determined to be impaired, at which time the cumulative gain or loss previously recognized in equity is included in net profit or loss for the period.

The fair value of the financial assets is determined through reference to quoted market prices at the balance sheet date. If there are no market values available for the financial assets, the value is determined by reputable financial institutions on the basis of market conditions.

Stock options

Upon the grant of the options no effects are recognized in the financial statements. Upon exercise, the effects, other than the tax benefit received by the Group, are recorded as movements in shareholders’ equity. Newly issued shares to satisfy the exercise of options are recorded as increases in share capital and contributed surplus for a total amount equal to the exercise price. If treasury shares are utilized to satisfy the exercise of the stock options, the difference between the exercise price and the value of treasury shares is recorded as a change in contributed surplus.

In certain circumstances the Group receives income tax benefits upon the exercise of stock options by certain employees. These benefits relate to the income tax deduction available to the Group for the difference between the exercise price and the fair value of the Group’s common shares on the date of exercise. These benefits are reported as a reduction of income tax expense.

Treasury stock

The Group purchases Gucci Group NV shares to satisfy the exercise of certain stock options pursuant to the Company’s Stock Option Plan. The value of the purchased shares is deducted from total shareholder’s equity as Treasury stock. Treasury stock is valued at cost applying the FIFO method. Where Treasury stock is reissued the consideration received is included in shareholder’s equity.

Income taxes

The provision for current income taxes is based on estimated taxable income.

Deferred income taxes are provided, using the liability method, to reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect in each of the relevant jurisdictions when such differences are expected to reverse. The effect of changes in the statutory tax rate is reflected in the statement of income in the period of such changes. Deferred tax assets and liabilities have been offset only when they relate to the same tax jurisdiction.

A valuation allowance is provided against net deferred tax assets, which are not considered probable of realization based on historical and expected profitability of the individual subsidiaries. Such assets are recognized when realized or when, based on expected future results, it becomes probable that they will be realized in future periods.

Net income per share

Basic net income per share is calculated by dividing the net income for the period by the weighted average number of common shares outstanding during the period. Diluted net income per share is calculated by dividing the net income for the period by the weighted average number of common shares

outstanding during the period adjusted for the effects of all potentially dilutive shares (i.e. employee stock options).

Recognition of revenues

Revenues from the sale of products are recognized on the transfer of ownership to third parties. Royalties are recognized at the time of sale of the licensed products and, in accordance with industry practice, are included in revenues. Should any product return or is expected to return or any commercial discount be recognized, the relevant value reduces revenues arising from the sale of goods. Cash discounts are recognized as financial costs.

Store opening/closing costs

Pre-opening expenditures incurred for new or remodeled retail stores are expensed as incurred except for rents paid during the construction period of new retail stores, which are capitalized as part of leasehold improvements. When a store is closed, the remaining investment in fixtures and leasehold improvements, net of expected salvage, is charged to income and the present value of any remaining lease liability, net of expected sublease recovery, is also charged to operating income as restructuring expenses.

Shipping & Handling costs

Shipping & Handling costs billed to the customer are recorded on an accrual basis in cost of goods sold. Revenues arising from amounts billed to the customer for those costs are recorded as revenues. Shipping & Handling costs not billed to the customer are included in Selling, general and administrative expenses.

Communication expenses

Communication expenses, which include advertising, public relations and visual display expenses, are expensed as incurred.

Cooperative advertising programs

Expenditures for cooperative advertising programs, under which certain wholesale distributor costumers are reimbursed for a portion of the advertising costs they incur are included in Selling, general and administrative expenses.

Restructuring expenses

Restructuring expenses are classified as non operating when they relate to restructuring of acquired companies during the year immediately after the acquisition. Restructuring expenses related to operations which are already part of the Group are classified as operating expenses.

Reclassifications

Certain amounts in the 2002 and 2001 financial statements have been reclassified to conform with the 2003 presentation.

Use of estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Additional information

The companies included in the consolidated financial statements at January 31, 2004 are listed in Note 26.

The financial statements used in the consolidation are those approved, or to be submitted for approval, by the shareholders of each subsidiary at their respective annual general meetings. Such statements have been reclassified to conform to international practice and adjusted, where necessary, to comply with Group accounting policies.

Fiscal years of the Group ended on January 31, 2004, 2003 and 2002.

All references to “financial statements” in these notes are to the “consolidated” financial statements for all periods, unless otherwise indicated.

Amounts included in the financial statements and notes are stated in thousands of Euro except percentages and net income per share and share amounts and where otherwise noted.

All references to the “Group” or the “Company” relate to Gucci Group N.V. and its subsidiaries, unless otherwise indicated.

(4) Segment information

The Group has five operating segments: Gucci Division (excluding Gucci Timepieces), Gucci Group Watches, Yves Saint Laurent, YSL Beauté and Other Operations. Gucci Division (excluding Gucci Timepieces) includes all revenues from the sale and licensing of Gucci branded products other than those from the wholesale distribution activities of the Gucci brand watches. Gucci Group Watches includes the production and wholesale distribution of Gucci and other Gucci Group brand watches. Yves Saint Laurent includes all revenues from the sale and licensing of Yves Saint Laurent branded products other than those from the wholesale distribution of Yves Saint Laurent perfumes, cosmetics and watches. YSL Beauté includes revenues from the sale of perfume, make-up and skincare products other than Gucci brand perfume. Other Operations includes revenues from operations, which are not individually material. The non-operating segment Corporate includes the parent company and certain subsidiaries which are involved principally in financial transactions and which do not generally sell to third parties as well as the expenses related to certain employees and members of management, who perform Group corporate functions, which are not allocated to the individual operating business segments. Inter-segment transactions are priced on an arm’s length basis in a manner similar to transactions with third parties.

The following table presents information about the Company by segment of activity:

	2003	2002	2001

Gucci Division (excluding Gucci Timepieces)
Revenues from external customers	1,378,515	1,382,690	1,512,798
Revenues from other segments	15,254	13,527	18,087
Total revenues	1,393,769	1,396,217	1,530,885
Operating profit before goodwill amortization and restructuring	387,773	402,867	461,213
Goodwill amortization	2,596	8,433	26,573
Restructuring	2,164	—	—
Operating profit after goodwill amortization and restructuring	383,013	394,434	434,640
Depreciation	60,450	59,241	53,113
Assets	1,184,968	1,080,778	1,028,202
Liabilities	259,213	261,803	229,128
Capital expenditures	105,288	94,186	201,811
Asset value of capital leases stipulated during the year	—	49,629	—

Gucci Group Watches (1)
Revenues from external customers
Gucci	142,080	153,862	186,084
Other Brands	21,821	29,565	30,213
Total revenues from external customers	163,901	183,427	216,297
Revenues from other segments	16,794	24,796	19,999
Total revenues	180,695	208,223	236,296
Operating profit before goodwill amortization and restructuring	25,310	36,797	55,144
Goodwill amortization	20,462	13,714	12,556
Restructuring	1,608	136	—
Operating profit after goodwill amortization and restructuring	3,240	22,947	42,588
Depreciation	5,412	4,417	3,999
Assets	330,613	387,465	384,396
Liabilities	54,537	71,303	54,307
Capital expenditures	4,861	23,617	8,472

(1) The Gucci Group Watches segment includes the production and wholesale distribution of Gucci and other brand watches.

	2003		2002		2001

Yves Saint Laurent
Revenues from external customers	154,615		145,792		101,054
Revenues from other segments	29		40		93
Total revenues	154,644		145,832		101,147
Operating (loss) before goodwill & trademark amortization and restructuring	(73,291	)	(63,653	)	(76,375	)
Goodwill and trademark amortization	23,083		23,102		22,301
Restructuring	4,217		—		—
Operating (loss) after goodwill & trademark amortization and restructuring	(100,591	)	(86,755	)	(98,676	)
Depreciation	15,316		12,720		8,095
Assets	573,440		600,113		520,434
Liabilities	111,882		78,377		117,002
Capital expenditures	36,818		59,236		45,241
Asset value of capital leases stipulated during the year	—		23,661		—

YSL Beauté (2)
Revenues from external customers	614,534		598,792		569,379
Revenues from other segments	154		236		189
Total revenues	614,688		599,028		569,568
Operating profit before goodwill & trademark amortization and restructuring	21,057		41,288		31,134
Goodwill and trademark amortization	52,220		52,303		49,385
Restructuring	2,852		3,008		—
Operating (loss) after goodwill & trademark amortization and restructuring	(34,015	)	(14,023	)	(18,251	)
Depreciation	20,467		18,956		15,610
Assets	1,242,943		1,305,817		1,308,985
Liabilities	200,957		218,978		214,285
Capital expenditures	25,406		24,874		20,623

(2) As of February 1, 2003 the Boucheron fragrance operation was integrated with YSL Beauté. Boucheron fragrance segment information for the periods ended January 31, 2003 and 2002, which had been included in “Other operations” was reclassified to YSL Beauté as if the integration had occurred on February 1, 2001.

	2003		2002		2001
Other Operations (3)
Revenues from external customers	275,825		233,585		165,588
Revenues from other segments	42,190		32,172		5,409
Total revenues	318,015		265,757		170,997
Operating (loss) before goodwill & trademark amortization and restructuring	(58,142	)	(74,658	)	(34,515	)
Goodwill and trademark amortization	27,214		28,866		19,394
Restructuring	15,892		—		—
Operating (loss) after goodwill & trademark amortization and restructuring	(101,248	)	(103,524	)	(53,909	)
Depreciation	18,575		15,339		7,107
Assets	806,637		831,989		664,867
Liabilities	166,236		173,598		91,293
Capital expenditures	41,611		122,739		48,827
Asset value of capital leases stipulated during the year	2,619		16,397		—

Corporate
Operating costs excluding restructuring	(30,301	)	(33,920	)	(35,577	)
Restructuring	275		—		—
Depreciation	5,458		5,384		4,546
Assets	282,671		280,146		244,921
Liabilities	226,340		261,666		314,297
Capital expenditures	2,070		33,313		16,976
Asset value of capital leases stipulated during the year	3,578		—		—

Elimination
Revenues from other segments	(74,421	)	(70,771	)	(43,777	)
Operating loss (profit) before goodwill & trademark amortization and restructuring	(26	)	282		(2,430	)
Operating loss (profit) after goodwill & trademark amortization and restructuring	(26	)	282		(2,430	)
Assets	(305,293	)	(308,738	)	(236,107	)
Liabilities	(373,720	)	(378,971	)	(328,209	)

Consolidated
Revenues from external customers	2,587,390		2,544,286		2,565,116
Operating profit before goodwill & trademark amortization and restructuring	272,380		309,003		398,594
Goodwill and trademark amortization	125,575		126,418		130,209
Restructuring	27,008		3,144		—
Operating profit after goodwill & trademark amortization and restructuring	119,797		179,441		268,385
Depreciation	125,678		116,057		92,470
Segment assets	4,115,979		4,177,570		3,915,698
Unallocated assets	2,060,250		3,603,037		3,537,288
Consolidated total assets	6,176,229		7,780,607		7,452,986
Segment liabilities	645,445		686,754		692,103
Unallocated liabilities	2,175,142		2,357,854		2,136,605
Consolidated total liabilities	2,820,587		3,044,608		2,828,708
Capital expenditures	216,054		357,965		341,950
Asset value of capital leases stipulated during the year	6,197		89,687		—

(3) The Other Operations segment includes revenues from operations which individually are not material to the

Group.

As required by IAS 14 (Revised), unallocated assets and liabilities include current and deferred taxation and financial

assets and liabilities.

The following table presents information about the Company by geographic area:

	2003		2002		2001

United States
Revenues from external customers	551,569		521,203		542,815
Assets	478,495		535,237		452,452
Capital expenditures	37,736		81,947		82,408
Asset value of capital leases stipulated during the year	—		83,184

Italy
Revenues from external customers	332,262		338,075		337,577
Assets	1,054,908		1,024,229		941,581
Capital expenditures	35,214		102,409		83,666
Asset value of capital leases stipulated during the year	2,619		6,503		—

France
Revenues from external customers	229,295		247,991		236,792
Assets	1,851,493		1,968,636		2,063,754
Capital expenditures	26,120		49,804		37,509

Rest of Europe
Revenues from external customers	571,009		496,396		466,747
Assets	962,558		888,938		888,007
Capital expenditures	31,764		84,373		100,113
Asset value of capital leases stipulated during the year	3,578		—		—

Japan
Revenues from external customers	523,543		503,138		519,193
Assets	287,407		212,177		209,240
Capital expenditures	72,234		27,458		22,654

Rest of Asia
Revenues from external customers	287,824		307,750		330,061
Assets	128,831		116,484		125,481
Capital expenditures	12,701		11,746		15,455

Rest of world
Revenues from external customers	91,888		129,733		131,931
Assets	6,060		7,921		8,775
Capital expenditures	285		228		145

Elimination
Assets	(653,773	)	(576,052	)	(773,592	)

Consolidated
Revenues from external customers	2,587,390		2,544,286		2,565,116
Segment assets	4,115,979		4,177,570		3,915,698
Unallocated assets	2,060,250		3,603,037		3,537,288
Consolidated total assets	6,176,229		7,780,607		7,452,986
Capital expenditures	216,054		357,965		341,950
Asset value of capital leases stipulated during the year	6,197		89,687		—

Assets in France and in Italy include € 1,295.8 million and € 266.9 million, respectively, of intangible assets (goodwill and trademarks), which relate to global operations; it is not possible to allocate these values to individual geographic segments.

Rest of Asia includes principally China, Guam, Hong Kong, Korea, Taiwan, Singapore and Malaysia.

Rest of world includes principally North America excluding the United States, South America, the Middle East and Australia.

(5) Inventories, net

Inventories, net of allowances for excess and obsolete items, at January 31, 2004 and 2003 consisted of the following:

	2003	2002

Finished goods	361,921	333,919
Work in progress	30,121	29,054
Raw materials	103,613	109,055
Inventories, net	495,655	472,028

(6) Other current assets

Other current assets at January 31, 2004 and 2003 consisted of the following:

	2003	2002

VAT & other taxes	127,739	149,029
Prepaid expenses	89,738	88,468
Prepaid tax	18,821	30,924
Other	40,164	57,765
Other current assets	276,462	326,186

(7) Property, plant and equipment, net

Property, plant and equipment, net, at January 31, 2004 and 2003 consisted of the following:

	2003		2002

Land	129,125		131,724
Buildings	322,475		318,493
Plant and production equipment	108,953		91,541
Furniture and fixtures	122,153		109,617
Leasehold improvements	348,975		320,077
Electronic office machines	48,803		54,390
Construction in progress	91,432		47,237
Other	15,499		25,368
Property, plant and equipment, gross	1,187,415		1,098,447
Accumulated depreciation	(246,143	)	(185,950	)
Property, plant and equipment, net	941,272		912,497

The movements in property, plant and equipment were as follows:

Cost	2003		2002

Opening balance	1,098,447		844,281
Additions	201,326		362,575
Acquisitions	3,646		540
Disposals	(59,845	)	(44,142	)
Currency translation	(56,159	)	(64,807	)
Closing balance	1,187,415		1,098,447

Accumulated depreciation	2003		2002

Opening balance	185,950		152,424
Charge for the year	102,077		93,950
Disposals	(43,353	)	(39,052	)
Write down of fixed assets	13,618		—
Currency translation	(12,149	)	(21,372	)
Closing balance	246,143		185,950

Additions include assets leased under capital leases amounting to € 6.2 million and leasehold improvements amounting to € 53.0 million for new stores and store refurbishments and expansions as well as the completion of the acquisition of a property in the Ginza district of Tokyo amounting to € 64.7 million.

In 2003, the movements in capital lease assets were as follows:

	Cost		Accumulated amortization		Net book value

Opening balance	132,792		(2,293	)	130,499
Addition	6,197				6,197
Acquisitions	2,566				2,566
Charge for the year	—		(6,134	)	(6,134	)
Write down of fixed assets	—		(4,455	)	(4,455	)
Currency translation	(9,352	)	196		(9,156	)
Closing balance	132,203		(12,686	)	119,517

As at January 31, 2004 property, plant and equipment included certain land and buildings pledged as security for financial liabilities (see Note 10) as well as a building with a carrying value of € 7.2 million pledged as security for a mutual agreement procedures currently under negotiation with certain tax authorities.

(8) Goodwill, trademarks, other intangible assets and deferred charges, net

Trademarks and accumulated amortization at January 31, 2004 and 2003 consisted of the following:

	2003		2002
	Gross	Accumulated amortization	Net	Net

Yves Saint Laurent	941,201	190,062	751,139	798,199
Other brands	463,079	88,988	374,091	398,895
Total trademarks	1,404,280	279,050	1,125,230	1,197,094

The movements in trademarks were as follows:

Cost	2003	2002

Opening balance	1,404,242	1,324,463
Acquisitions	—	—
Adjustments to prior year value	—	79,815
Currency translation	38	(36	)
Closing balance	1,404,280	1,404,242

Accumulated amortization	2003	2002

Opening balance	207,148	132,938
Charge for the year	71,902	75,099
Currency translation	—	(889	)
Closing balance	279,050	207,148

The movements in goodwill were as follows:

Cost	2003		2002

Opening balance	829,425		861,275
Acquisitions	12,229		29,721
Adjustments to prior year value	—		(58,557	)
Currency translation	(5,477	)	(3,014	)
Closing balance	836,177		829,425

Accumulated amortization	2003		2002

Opening balance	157,280		109,330
Charge for the year	53,673		51,319
Currency translation	(1,321	)	(3,369	)
Closing balance	209,632		157,280

Other intangible assets consisted of the following:

	2003		2002

Store lease acquisition costs	158,333		154,723
Software	43,910		42,523
Licenses repurchased	62,322		62,830
Other	43,925		45,248
Intangible assets, gross	308,490		305,324
Accumulated amortization	(83,926	)	(64,548	)
Intangible assets, net	224,564		240,776

The movements in other intangible assets were as follows:

Cost	2003		2002

Opening balance	305,324		249,927
Additions	20,925		85,077
Acquisitions	206		602
Disposals	(5,996	)	(6,242	)
Currency translation	(11,969	)	(24,040	)
Closing balance	308,490		305,324

Accumulated amortization	2003		2002

Opening balance	64,548		49,164
Charge for the year	23,602		22,107
Disposals	(5,996	)	(5,094	)
Write down of fixed assets	3,104		—
Currency translation	(1,332	)	(1,629	)
Closing balance	83,926		64,548

(9) Financial assets

Short and Long-term financial assets on January 31, 2004 included € 180.5 million and € 17.4 million, respectively of time deposit, the withdrawal of which is restricted subject to the repayment of certain short and long-term financial payables.

Financial assets on January 31, 2004 included also the KFW International Finance bond. This bond has the following characteristics:

S&P Rating	Nominal value*	Fair value Euro	Yield		Expiration date

AAA	US$ 245,000	199,557	2.29	%	24/01/2005

(*) In thousands

The KFW International Finance bond is pledged as security for a US$ 230 million letter of credit issued in connection with the settlement of the dispute among the Group, PPR and LVMH (see Note 14). The Company intends to hold this investment until its maturity, but before its expiration date may choose to use other financial assets as security for the letter of credit. As at January 31, 2004 the bond was reclassified from Long-term financial assets to Short-term financial assets as it maturity is less than 12 months.

During the period the movements in Financial assets were as follows:

	2003		2002

Opening balance	408,079		307,982
Addition	45,990		407,018
Disposal	(28,168	)	(253,038	)
Change of fair value	534		3,218
Currency translation	(28,898	)	(57,101	)
Closing balance	397,537		408,079

The disposal of the period represents the sale of the Dexia Municipal Agency bond held at January 31, 2003 in connection with a € 135 million loan which was repaid in December 2003.

(10) Bank overdrafts and short-term loans

Bank overdrafts and short-term loans at January 31, 2004 and 2003 consisted of the following:

	January 31, 2004				January 31, 2003
Currency	Nominal currency value*	Amount in Euro	Weighted average interest rate		Nominal currency value*	Amount in Euro	Weighted average interest rate

US Dollars	19,822	16,006	1.89	%	100,482	92,901	1.63	%
Euro	119,557	119,557	2.33	%	208,863	208,863	3.03	%
Japanese Yen	34,639,315	264,301	0.49	%	30,050,245	232,641	0.30	%
Swiss Franc	3,887	2,487	2.64	%	104,483	71,183	1.08	%
Other		21,336				24,946
Total	N/A	423,687	1.25	%	N/A	630,534	1.63	%

* In thousands

The other balances are composed of numerous small balances held by the Group’s individual subsidiaries.

At January 31, 2004 Bank overdrafts and short-term loans included the short-term portion of Long-term financial payables amounting to € 39.8 million (€ 38.3 at January 31, 2003).

Credit lines

On January 31, 2004, the Group had a syndicated multi-currency revolving credit facility amounting to € 667 million expiring on July 21, 2005, subject to an interest rate of LIBOR + 0.30% per annum and a commitment fee on the undrawn portion of 0.15% per annum. As at January 31, 2004 € 599.6 million was drawn against the facility. This amount is classified as Long-term financial payables.

On May 16, 2003, the Group signed a multi-currency revolving credit facility amounting to CHF 100 million expiring on May 16, 2006, subject to Interest rate per annum Libor + 0.63% and commitment fee per annum on the undrawn portion of 0.31%. As at January 31, 2004 the facility was fully drawn. The loan is classified as Long-term financial payables.

On November 28, 2003 the Group signed a syndicated loan agreement providing for two multi-currency revolving credit facilities both of them amounting to € 230 million. Terms and conditions of these facilities are as follows:

	Expiration-date	Interest rate per annum*		Commitment fee per annum
Facility A	26 / 11 / 2004	Libor + 0.50	%	0.165% on the undrawn portion
Facility B	28 / 11 / 2006	Libor + 0.60	%	0.240% on the undrawn portion

(*) The spread could be increased in a range between 0.85% and 0.95% depending upon the performance of the Group.

Under the agreement the Group has an option to extend Facility A for an additional year by transforming it from a revolving credit line into a loan for the amount outstanding as at the first year expiration date. Should the option be exercised, the loan would bear interest at Libor plus 0.50% per annum and would be entirely repayable on November 25, 2005. At January 31, 2004, € 115.0 million was drawn against facility A. As the Group intends to exercise the option, the loan has been classified as a Long-term financial payable.

As at January 31, 2004 Facility B was undrawn.

All of the three syndicated loan agreements are subject to financial covenants as follows:

• the ratio of Net Financial Indebtedness to the Net Worth should not be greater than 1:1;

• the ratio of Net Financial Indebtedness to Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) should not be greater than 3:1;

• the ratio of EBITDA to Financial expenditure, net of any financial income should not be less than 4:1.

The terms used in the financial covenants are defined in the syndicated loan agreement and may differ from similar terms used in the financial statements.

On January 31, 2004, all these covenants were satisfied.

Moreover, Gucci Group N.V is obliged to ensure that the aggregate total assets of certain subsidiaries of the Group represents not less than 85% of the total assets of the Group.

At January 31, 2004 the Group had further lines of credit, which were not firm commitments, totaling € 424.1 million (€ 619.7 million as at January 31, 2003).

As at January 31, 2004 financial liabilities secured by mortgages and pledged cash amounted to € 334.3 million (€ 190.1 million at January 31, 2003).

(11) Income taxes

Income tax expense (benefit) for 2003, 2002 and 2001 was as follows:

	2003		2002		2001

Current	49,281		105,236		136,153
Deferred	(71,396	)	(85,950	)	(77,474	)
Income tax-expense (benefit)	(22,115	)	19,286		58,679

The following table sets out the reconciliation between the effective tax rate and the statutory tax rate in The Netherlands:

	2003		2002		2001

Statutory tax rate in The Netherlands	35.0	%	35.0	%	35.0	%
Effect of different rate applicable to interest income of Gucci Luxembourg	(42.8	)%	(22.3	)%	(14.7	)%
Effect of different statutory rates applicable to operating subsidiaries	(35.0	)%	(10.1	)%	(10.7	)%
Non-deductible expenses	9.9	%	1.7	%	5.1	%
Benefit on exercise of stock options	(0.8	)%	(0.3	)%	(0.1	)%
Valuation allowance on deferred tax assets for tax losses carried forward	19.3	%	4.6	%	1.7	%
Other	(0.8	)%	(0.6	)%	(0.3	)%
Effective tax rate	(15.2	)%	8.0	%	16.0	%

Deferred tax balances, net of the valuation allowance, reflected in the financial statements at January 31, 2004 and 2003 were related to the following items:

	2003		2002
	Assets	Liabilities	Assets	Liabilities

Inventory	80,276	—	81,705	—
Intangible assets	23,165	294,917	28,237	331,911
Tangible assets	—	14,689	—	10,553
Net operating loss carry-forwards	138,099	—	123,984	—
Accrued compensation expenses	5,912	—	6,251	—
Accrued restructuring expenses	5,142	—	1,000	—
Depreciation and amortization	8,876	23,146	2,529	14,943
Accrued expenses	18,956	—	13,126	—
Non income taxes	2,405	—	1,678	—
Hedging reserve	—	3,411	—	5,190
Other	7,164	1,155	5,161	2,394
Deferred tax balances	289,995	337,318	263,671	364,991

The total deferred tax balance for net operating loss carry-forwards amounts to € 207,989 (€ 170,596 in 2002) against which a valuation allowance of € 69,890 (€ 46,612 in 2002) has been provided to reflect the uncertainty as to the recoverability of certain of these assets.

The recoverability of the Deferred tax assets recognized in the consolidated financial statements is supported by both the Company’s business plans and certain transactions implemented during the first quarter of 2004, when the Company made cash injections into certain French and United States subsidiaries. Said transactions will have the effect of increasing the likelihood and the speed of the recovery of Deferred tax assets accrued as of January 31, 2004 on net operating losses carried forward.

At January 31, 2004, the Group net operating loss carry-forwards expire as follows:

January 31,

2005		4,666
2006		4,944
2007		8,265
2008		28,415
2009 and beyond		174,477
Without expiration		358,011
Total		578,778

In accordance with a recently issued French fiscal law the aggregate amount of prior years losses carried forward in France, were reclassified to the category without expiration.

(12) Long-term financial payables

Long-term financial payables at January 31, 2004 and 2003 consisted of the following:

	Jan 31, 2004																		Jan 31, 2003
	Floating rate										Fixed rate Yen		Total loans		Capital leases*		Total
	€		CHF		US$		GBP		Yen		Fixed rate Yen		Total loans		Capital leases*		Total		Total
Due in fiscal year:

2004	—		—		—		—		—		—		—		—		—		121,995
2005	391,411		117,238		201,873		1,605		20,601		21,395		754,123		2,546		756,669		629,502
2006	6,290		64,762		4,037		1,605		47,307		42,912		166,913		2,904		169,817		211,443
2007	6,830		765		4,037		1,605		—		107,134		120,371		3,014		123,385		108,527
2008	7,370		765		4,037		1,605		—		78,132		91,909		3,109		95,018		127,097
Beyond	39,043		17,555		20,187		11,158		—		—		87,943		85,460		173,403		—
																			1,198,564
Other																			3,847
Total	450,944		201,085		234,171		17,578		67,908		249,573		1,221,259		97,033		1,318,292		1,202,411

Weighted Average interest rate	2.60	%	0.74	%	1.58	%	4.77	%	0.42	%	0.82	%	1.65	%	6.15	%	1.98	%	2.33	%

(*) Calculated as the present value of minimum lease payments under financial leases due beyond twelve months after January 31, 2004.

The other balances are composed of numerous small balances held by the Group’s individual subsidiaries.

The carrying value of Long-term financial liabilities approximates fair value.

(13) Pension liabilities and severance indemnities

Pension liabilities and severance indemnities at January 31, 2004 and 2003 consisted of the following:

	2003	2002

Staff leaving indemnities	52,803	48,403
Deferred compensation	1,935	2,247
Other	386	181
Pension liabilities and severance indemnities	55,124	50,831

Pension liabilities and severance indemnities at January 31, 2004 and 2003 relate to employees in the following countries:

	2003	2002

Italy	26,935	23,480
France	22,317	22,455
Other	5,872	4,896
Pension liabilities and severance indemnities	55,124	50,831

In Italy staff leaving indemnity is paid to all employees on termination of their employment.

Each year, the Group accrues for each employee an amount partly based on the employee’s remuneration and partly based on the revaluation of the amounts previously accrued.

The indemnity is an unfunded, but fully provided, liability.

In France employees are entitled to a leaving indemnity if they leave the company in certain circumstances. The liability is based on an actuarial valuation based on a prudent assessment of the relevant parameters, which were as follows:

	2003		2002

Discount rate	6	%	5.1	%
Projected future remuneration increases	4	%	3.1	%
Projected future employee turnover	2-7	%	2-7	%

The indemnity is an unfunded, but fully provided, liability.

Additional disclosures have not been made, as the plans are not material.

The movements in pension liabilities and severance indemnities were as follows:

	2003		2002

Opening balance	50,831		47,550
Accruals for the year	9,818		9,195
Acquisitions	371		681
Payments	(5,259	)	(5,169	)
Currency translation	(637	)	(1,426	)
Closing balance	55,124		50,831

(14) Shareholders’ equity

Share Capital

The authorized share capital of Gucci Group N.V. amounts to € 228.7 million and is divided into 224,215,247 shares.

Treasury stock

In 2003 the Group repurchased 3,203,987 shares for an aggregate cost of € 281.6 million. The repurchased shares are held in treasury and reissued to the Company’s employees upon the exercise of their stock options pursuant to the Company’s stock option plan.

As at January 31, 2004 the Treasury stock includes 2,971,176 shares (2,400,392 shares as at January 31, 2003) with an average value of € 87.95 per share (€ 72.2 as at January 31, 2003)

Dividends

On May 24, 2003, the Supervisory Board approved a dividend of € 0.50 per share. Following approval of the Annual Accounts by shareholders at the Annual General Meeting on July 16, 2003, the Company paid

the dividend from the result of the year 2002 of € 0.50 per share. In 2002 the dividend distributed was US$ 0.50 per share.

The Shareholders at the Annual General Meeting on July 16, 2003 approved the distribution of € 13.50 per share in the form of a return of capital. The payment of the € 13.50 per share to the Euronext Amsterdam (AEX) shares occurred on October 2, 2003; the payment of US$ 15.78 (the US dollar equivalent of € 13.50) to shares registered on the New York Stock Exchange (NYSE) occurred promptly thereafter. The aggregate amount paid to shareholders was € 1,347.0 million. As a result of the payments, the US$ 101.50 per share “put price” that PPR is committed to offer for all Gucci Group shares in April 2004 (see Strategic alliance) was reduced by US$ 15.98 per share. This amount was calculated as follows:

•		US$ 15.78: The US dollar per share equivalent of € 13.50 determined by the € 1/US$ 1.1692 exchange rate published by the European Central Bank shortly after 2:15pm Central European Time on October 2, 2003.

•		US$ 0.20: The US dollar denominated time value of money determined by applying 2.15% (3-month US dollar LIBOR fixed on October 2, increased by 100 basis points) to US$ 15.78 over the period from October 2, 2003 to April 30, 2004.

Strategic Alliance

On September 10, 2001, the Company, Pinault-Printemps-Redoute S.A. (“PPR”) and LVMH-Moët Hennessy Louis Vuitton (“LVMH”) entered into a comprehensive settlement of the legal actions pending among them on that date.

The Settlement Agreement provided for the purchase by PPR of 8,579,337 Common Shares, representing approximately 8.6% of the Company’s then outstanding share capital, from LVMH at a price of US$ 94 per Common Share. Pursuant to the Settlement Agreement, PPR, LVMH and the Group dismissed all pending litigation, claims and actions relating to, inter alia, the shareholdings of LVMH or PPR in the Company, the acquisitions of such shareholdings or the granting of options to Company management.

Pursuant to the Settlement Agreement, PPR has agreed to commence an Offer to all holders of Common Shares at a price of US$ 101.50 (the “Offer Price”) per Common Share on March 22, 2004, with payment to be made on or before April 30, 2004 (such period from March 22, 2004 through April 30, 2004 being referred to herein as the “Offer Period”). As a result of the distribution of € 13.50 per share in the form of a return of capital (see Dividends) the Offer Price was reduced by US$ 15.98 and fixed at US$ 85.52. If, immediately prior to the expiration of the Offer Period, the Common Shares not tendered in the Offer and the Common Shares issuable upon exercise of outstanding options granted to employees of Gucci to purchase Common Shares constitute less than the greater of (1) 15% of the then-outstanding Common Shares and (2) 15 million Common Shares, PPR will provide a subsequent offering period of no less than 10 days following its acceptance for payment of Common Shares tendered in the initial offering period (as contemplated by Rule 14d-11 under the U.S. Securities Exchange Act of 1934, as amended). PPR may delay the commencement of the Offer for a maximum of six months upon the occurrence of a Force Majeure Event, provided that PPR may only defer the Offer for so long as the Force Majeure Event exists and the existence of such event must be confirmed by a majority of the Independent Directors.

LVMH and the Company (but no other third parties) would have the right to seek monetary damages and/or specific performance from PPR if it fails to honor its obligations under the Settlement Agreement, including an injunction to require PPR to commence the Offer and purchase the Common Shares in accordance with the terms of the Settlement Agreement.

Under a simultaneously executed Amended and Restated Strategic Investment Agreement (“Restated SIA”) among the Company, PPR and Marothi, in the event that PPR fails to commence and complete the Offer in accordance with the terms set forth in the Settlement Agreement, which were reiterated in the Restated SIA, a majority of the Independent Directors shall have the ability to seek specific performance, sue for damages and/or distribute a stock dividend for each issued and outstanding Common Share not owned by PPR so that as a result of such stock dividend, PPR’s share ownership shall be reduced to 42% of the issued and outstanding Common Shares. In the event the Independent Directors cause the Company to distribute a stock dividend, the number of Supervisory Board members nominated by PPR would be reduced by one member and PPR would be prohibited from acquiring additional Common Shares unless

it does so pursuant to a public offer for all of the outstanding Common Shares which is recommended to the Company’s shareholders by the Independent Directors.

Net income per share

The numerator for the calculation of both the basic and fully diluted net income per share is “Net income for the year”.

Options granted in accordance with the Company’s Incentive Stock Option Plan are the only items which can dilute net income per share. The denominator used in “Basic net income per share” and “Diluted net income per share” is calculated using the treasury stock method as shown in the following table:

	Jan 31, 2004	Jan 31, 2003

Denominator in calculating basic net income per share	99,518,957	101,060,751
Add: In the money options outstanding	5,948,973	6,913,971
Less: Treasury shares *	4,770,703	5,551,804
Denominator in calculating diluted net income per share	100,697,227	102,422,918

* Theoretical treasury shares which would be acquired from proceeds of exercise of all in-the-money options outstanding.

2,700,000 options to purchase shares of common stock with an average strike price of US$ 98.79 were outstanding as at January 31, 2004, but were not included in the computation of diluted net income per share (2,474,000 as at January 31, 2003) because their exercise price was greater than the average market price of the common shares during the year; accordingly, the inclusion of these 2,700,000 options would have been antidilutive in the calculation.

Accumulated other comprehensive income

Accumulated other comprehensive income as at January 31, 2004 and 2003 consisted of the following:

	2003		2002

Exchange effect arising from change to Euro in 2001	940,449		940,449
Hedging reserve	66,953		98,529
Fair value reserve	1,721		2,712
Foreign currency adjustments	(338,204	)	(287,571	)
Accumulated other comprehensive income	670,919		754,119

Hedging reserve

The movements in the Hedging reserve account in 2003 and 2002 were as follows:

	2003		2002

Opening balance	98,529		(7,559	)
Realized change in the value of Cash flow hedges related to transactions completed during the year	(120,639	)	(56,806	)
Total changes of the fair value of Cash flow hedges during the year	87,490		168,577
Tax on changes during the year	1,577		(5,190	)
Currency translation	(4	)	(493	)
Closing balance	66,953		98,529

Fair value reserve

The movements in the Fair value reserve account in 2003 and 2002 were as follows:

	2003		2002

Opening balance	2,712		(2,388	)
Gain on available -for-sale investments sold during the year	(1,304	)	(6,886	)
Change of the fair value of available-for-sale investments during the year	451		12,093
Currency translation	(138	)	(107	)
Closing balance	1,721		2,712

Foreign currency adjustments

Movements in foreign currency adjustments account in 2003 and 2002 were as follows:

	2003		2002

Opening balance	(287,571	)	(230,410	)
Translation of opening net equity and consolidation adjustments	(72,679	)	(112,273	)
Translation of result for the period	(2,451	)	(3,219	)
Translation of long-term inter-company accounts receivable	24,497		58,331
Closing balance	(338,204	)	(287,571	)

Employee Stock Ownership Plan (ESOP)

The ESOP formed in February 1999 was terminated in 2001 and the shares previously issued to it were cancelled. As part of the termination agreement, the Company committed to issue shares to employees. In fulfillment of the commitment 35,920 shares were issued in April 2003. In total the Company issued 44,564 shares to employees under the ESOP. The issuance of these shares did not have a material impact on the Company’s net income or shareholders’ equity.

(15) Stock option plan

Under the Incentive Stock Option Plan the Company issues options to employees and directors to purchase shares of the Company. On January 31, 2004, the Group was authorized to grant options from time to time with respect to up to a cumulative total of 18,514,444 common shares (17,264,444 at January 31, 2003).

The Company amended and restated the Incentive Stock Option Plan. With few exceptions, options issued under the Incentive Stock Option Plan and the Amended and Restated Incentive Stock Option Plan (the New Option Plan) generally were granted at exercise prices equal to or greater than the share price at the time of grant, generally vest proportionally for each complete year of service to the Company over a period up to five years from the date of issuance, and generally expire ten years from the date of issuance.

If less than the greater of 15 million shares or 15% of the Company’s outstanding shares remain untendered at the end of the Offer Period (see Strategic alliance), than options issued under the New Option Plan and (if agreed by the option holders) options issued prior to the amendment and restatement of the Stock Option Plan not tendered into the Offer would convert to Stock Appreciation Rights (SARs), which would convert to cash payments by the Company when exercised. The SARs would have the same vesting period as the options and the amount of the related cash payments would be determined based on a formula, which measures the value of the Company as compared to other stock exchange listed comparator companies.

As at January 31, 2004 the Company has not made any provision for such possible cash payments, as the conversion of the options into SARs is not certain. Had the contingent liability been recorded as at January 31, 2004, it would not have been material.

During October 2003 the Company paid € 13.50 per share in the form of a return of capital. In order to implement an equitable treatment for the benefit of the participants to the Company’s Stock Option Plan,

the Supervisory Board approved a one-time extraordinary reduction of US$ 15.78 (the US$ equivalent of € 13.50 determined by the € 1/US$ 1.1692 exchange rate published by the European Central Bank shortly after 2:15pm Central European Time on October 2, 2003) in the exercise price of each option granted prior to October 2, 2003 under the Company’s Stock Option Plan.

The following table summarizes the combined option activity (all amounts are stated in US Dollars, except for share amounts):

	2003		2002		2001
	Shares	Weighted average price *	Shares	Weighted average price *	Shares	Weighted average price *
Outstanding at beginning of the year	9,505,599	85.68	9,631,803	79.36	9,381,049	83.67
Granted	1,539,950	85.05	1,300,750	88.19	1,044,900	85.43
Exercised	4,016,388	55.70	1,302,214	42.48	612,475	39.63
Cancelled	80,208	66.85	124,740	65.11	181,671	72.35
Outstanding at the end of the year	6,948,953	81.42	9,505,599	85.68	9,631,803	79.36
Exercisable at the end of the year	2,723,243	80.59	4,741,339	76.18	4,256,263	62.08
Available for grant at the end of the year based on Shareholders’ authorization	1,239,645	N/A	1,449,387	N/A	1,375,397	N/A

(*) Amounts in US Dollar

Additional information regarding options at January 31, 2004, was as follows:

	Options outstanding			Options exercisable
Range of exercise price *	Number outstanding	Weighted average remaining contractual life (months)	Weighted average exercise price *	Number exercisable	Weighted average exercise price *

6.22 - 62.10	396,438	72.1	52.66	193,438	51.86
62.13 – 62.97	499,860	82.1	62.38	134,170	62.69
63.29 – 66.82	477,245	79.2	65.04	152,255	64.85
67.05 – 71.22	446,700	77.4	68.25	315,500	67.75
71.88 – 79.26	1,166,760	98.2	72.65	236,480	73.37
79.42 – 84.98	1,261,950	111.52	79.81	41.400	83.38
87.22 – 112.22	2,700,000	80.3	98.79	1,650,000	90.25
Total	6,948,953	N/A	81.42	2,723,243	80.59

(*) Amounts in US Dollar

(16) Net revenues

Net revenues include royalty income primarily from the use of the Gucci brand related to eyewear, fragrances and ready-to-wear as well as from the use of the Yves Saint Laurent and other brands for various products.

Royalties related to the following trademarks:

	2003	2002	2001

Gucci	41,731	47,615	51,435
Yves Saint Laurent	9,261	12,876	21,429
Other	3,600	3,704	3,612
Total	54,592	64,195	76,476

(17) Selling, general and administrative expenses

Selling, general and administrative expenses in 2003, 2002, and 2001 were as follows:

	2003	2002	2001

Store	495,917	453,180	432,445
General and administrative	403,511	409,520	403,983
Communication	279,015	289,861	290,651
Selling	178,111	171,389	159,290
Shipping & Handling	67,188	62,472	61,432
Marketing & Promotions	24,835	29,656	28,460
Royalties expense	8,144	8,873	8,827
Research & Development	6,305	8,325	8,035

Selling, general and administrative expenses	1,463,026	1,433,276	1,393,123

(18) Financial income, net

Financial income, net, in 2003, 2002 and 2001 consisted of the following:

	2003		2002		2001

Interest income	67,224		105,208		150,750
Interest (expense)	(50,354	)	(49,559	)	(63,773	)
Financial income (expense) from hedging transactions	(5,343	)	397		899
Financial income from disposal of financial assets	1,304		6,886		—
Other	(950	)	(136	)	247
Financial income, net	11,881		62,796		88,123

In 2003 the income from disposal of financial assets derived from the disposal of the Dexia Municipal Agency bond disclosed in Note 9; in 2002 the income derived from the sale of the KFW International Finance bond held as at the end of 2001.

(19) Restructuring expenses

In 2003 restructuring expenses, related primarily to provisions to close certain stores, amounting to € 27.0 million were incurred. These expenses were classified as Operating expenses.

In 2002 restructuring expenses, related primarily to the integration of Boucheron fragrance operations into YSL Beauté, amounting to € 3.1 million were incurred. These expenses were classified as Operating expenses.

In 2001 restructuring expenses of approximately € 8.4 million were primarily for severance payments at Boucheron, Balenciaga and Bottega Veneta, which were offset by the reversal of the over-accrual of certain restructuring expenses in Yves Saint Laurent and YSL Beauté provided in 2000. The 2001 restructuring expenses were not classified as operating expenditures as they related to restructuring of acquired companies during the year immediately after the acquisition.

(20) Commitments and contingencies

Leases

Annual future minimum fixed rental payments under non-cancelable Operating leases as of January 31, 2004, were as follows:

Fiscal year	Store	Other	Total

2004	85,006	30,575	115,581
2005	84,496	23,320	107,816
2006	81,075	20,068	101,143
2007	74,287	16,502	90,789
2008	69,621	15,566	85,187

Thereafter	325,746	36,846	362,592
Total	720,231	142,877	863,108

In addition to future minimum rental payments, the Group is committed to paying a fixed percentage of net sales in excess of specified amounts for certain of its stores. In Japan the rental contracts do not specify minimal rental payments, but provide for payments calculated as a percentage of sales.

Total store rent expense for 2003, 2002 and 2001 was as follows:

	2003	2002	2001

Fixed rent	89,713	83,858	73,154
Variable rent	102,352	100,138	99,332
Total store rent	192,065	183,996	172,486

Annual future minimum rental payments under Capital leases as of January 31, 2004, were as follows:

Fiscal year	Total

2004	7,584
2005	7,869
2006	8,310
2007	8,433
2008	8,535

Thereafter	143,910
Total future minimum rental payments under Capital leases	184,641
Future finance charge on Capital leases	(85,232	)
Present value of finance liabilities on Capital leases	99,409

At January 31, 2004 the present value of financial liabilities on Capital lease was classified as Short-term loans and Long-term financial payables for an amount of € 2.4 million and € 97.0 million, respectively.

Supply contracts

Unrelated subcontractors assemble the Group’s leather goods. In order to ensure the availability of production capacity, the Group enters into agreements with certain suppliers, which included minimum supply commitments over periods up to five years. Moreover the Group enters into agreements with suppliers of certain watch components, which included minimum supply commitments after January 31, 2004.

The total amount of the future commitments related to these agreements at January 31, 2004, was as follows:

Fiscal year

2004		76,937
2005		6,071
2006		3,271
2007		1,871
2008		1,121
Total		89,271

Hedging contracts

During the period, the Group entered into derivative transactions to cover its foreign exchange exposure related to anticipated future transactions in currencies other than the reporting currency of the Group.

The notional values of the contracts outstanding at January 31, 2004 and January 31, 2003 were the following:

January 31, 2004	Forward	Combination options	Total

US Dollars	140,564	492,770	633,334
Japanese Yen	119,007	432,412	551,419
English Pound	186,336	—	186,336
Hong Kong Dollars	90,194	—	90,194
Korean Won	14,410	—	14,410
Total	550,511	925,182	1,475,693

January 31, 2003	Forward	Combination options	Total

US Dollars	152,934	543,091	696,025
Japanese Yen	145,532	526,121	671,653
English Pound	149,934	—	149,934
Hong Kong Dollars	94,495	—	94,495
Korean Won	4,109	—	4,109
Total	547,004	1,069,212	1,616,216

Certain subsidiaries of the Group entered into forward contracts in relation to trade accounts receivables as well as payables and financial receivables and payables, denominated in the currencies indicated below.

The contracts outstanding at January 31, 2004 and January 31, 2003 were as follows:

Currencies	January 31, 2004	January 31, 2003

US Dollar	295,167	487,653
Japanese Yen	21,579	22,704
Swiss Franc	74,617	111,976
English Pound	71,944	52,322
Other currencies	18,574	16,600
Total	481,881	691,255

All contracts mature at various dates from February 2004 to January 2006.

All derivatives contracts are entered into with major financial institutions and, consequently, the Group does not expect default by the counter-parties.

Litigation

From December 1, 1978 through November 30, 2003, Gucci had a license with a subsidiary of Wella A.G. (“Wella”) for production of fragrances and cosmetics. Wella did not renew the license on or before November 30, 2001, with the result that the license lapsed on November 30, 2003. Wella has filed legal actions in the U.S.A., Germany and Italy seeking a declaration that the license will subsist until November 30, 2028. The case is pending; however the Group’s management and legal advisors believe that it will not have a material adverse effect on the financial position, results of operations or cash f

GUCCI GROUP NV 6-K