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SECURITIES AND EXCHANGE COMMISSION
ACT OF 1934
(Jurisdiction of incorporation or organization)
(Address of principal executive offices)
Tel. +39 335 78 64 209
sdirosa@natuzzi.com
Via Iazzitiello 47, 70029 Santeramo in Colle, Bari, Italy
(Name, telephone, e-mail and/or facsimile number and address of company contact person)
Title of each class | Name of each exchange on which registered | |
American Depositary Shares, each representing one Ordinary Share | New York Stock Exchange | |
Ordinary Shares, with a par value of €1.00 each | New York Stock Exchange (for listing purposes only) |
None
None
Large accelerated filero | Accelerated filerþ | Non-accelerated filero |
U.S. GAAPo | IFRSo | Otherþ |
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Exhibit 8.1 | ||||||||
Exhibit 12.1 | ||||||||
Exhibit 12.2 | ||||||||
Exhibit 13.1 |
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Year Ended At December 31, | ||||||||||||||||||||||||
2010 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
(millions of | ||||||||||||||||||||||||
dollars, except | ||||||||||||||||||||||||
per Ordinary | ||||||||||||||||||||||||
Share)(1) | (millions of euro, except per Ordinary Share) | |||||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||||||
Amounts in accordance with Italian GAAP: | ||||||||||||||||||||||||
Net sales: | ||||||||||||||||||||||||
Leather- and fabric-upholstered furniture | $ | 608.6 | € | 460.5 | € | 450.6 | € | 587.8 | € | 563.5 | € | 660.2 | ||||||||||||
Other(2) | 76.8 | 58.1 | 64.8 | 78.2 | 70.9 | 75.2 | ||||||||||||||||||
Total net sales | 685.4 | 518.6 | 515.4 | 666.0 | 634.4 | 735.4 | ||||||||||||||||||
Cost of sales | (424.9 | ) | (321.5 | ) | (329.8 | ) | (478.8 | ) | (460.6 | ) | (490.5 | ) | ||||||||||||
Gross profit | 260.5 | 197.1 | 185.6 | 187.2 | 173.8 | 244.9 | ||||||||||||||||||
Selling expenses | (203.9 | ) | (154.3 | ) | (149.6 | ) | (172.3 | ) | (173.9 | ) | (186.2 | ) | ||||||||||||
General and administrative expenses | (56.0 | ) | (42.4 | ) | (46.6 | ) | (49.9 | ) | (49.0 | ) | (42.2 | ) | ||||||||||||
Operating income (loss) | 0.6 | 0.4 | (10.6 | ) | (35.0 | ) | (49.1 | ) | 16.5 | |||||||||||||||
Operating income (loss) per Ordinary Share | 0.01 | 0.01 | (0.02 | ) | (0.64 | ) | (0.90 | ) | 0.30 | |||||||||||||||
Other income (expense), Net (3) (4) (5) | (5.8 | ) | (4.4 | ) | 3.1 | (25.8 | ) | (2.6 | ) | 2.8 | ||||||||||||||
Income (loss) before taxes and minority interests | (5.2 | ) | (4.0 | ) | (7.5 | ) | (60.8 | ) | (51.7 | ) | 19.3 | |||||||||||||
Income taxes | (9.3 | ) | (7.0 | ) | (9.8 | ) | (1.5 | ) | (11.4 | ) | (7.1 | ) | ||||||||||||
Income (loss) before non-controlling interests | (14.5 | ) | (11.0 | ) | (17.3 | ) | (62.3 | ) | (63.1 | ) | 12.2 | |||||||||||||
Non-controlling interest | 0.1 | 0.1 | 0.4 | (0.4 | ) | (0.5 | ) | (0.1 | ) | |||||||||||||||
Net income (loss) | (14.6 | ) | (11.1 | ) | (17.7 | ) | (61.9 | ) | (62.6 | ) | 12.3 | |||||||||||||
Net income (loss) per Ordinary Share | $ | (0.27 | ) | € | (0.20 | ) | € | (0.32 | ) | € | (1.13 | ) | € | (1.14 | ) | € | 0.23 | |||||||
Dividends declared per share | — | — | — | — | — | — | ||||||||||||||||||
Amounts in accordance with U.S. GAAP: | ||||||||||||||||||||||||
Net sales | 675.1 | 510.8 | 506.0 | 670.1 | 635.9 | 736.8 | ||||||||||||||||||
Operating income (loss) | 0.6 | 0.4 | (14.2 | ) | (40.0 | ) | (46.4 | ) | 22.7 | |||||||||||||||
Operating income (loss) per Ordinary Share | 0.01 | 0.01 | (0.26 | ) | (0.73 | ) | (0.85 | ) | 0.41 | |||||||||||||||
Net income (loss) | (12.3 | ) | (9.3 | ) | (25.7 | ) | (55.7 | ) | (60.0 | ) | 14.5 | |||||||||||||
Net income (loss) per Ordinary Share (basic and diluted) | $ | (0.22 | ) | € | (0.17 | ) | € | (0.47 | ) | € | (1.02 | ) | € | (1.09 | ) | € | 0.26 | |||||||
Weighted average number of Ordinary Shares Outstanding | 54,853,045 | 54,853,045 | 54,853,045 | 54,850,643 | 54,817,086 | 54,733,796 | ||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||||||
Amounts in accordance with Italian GAAP: | ||||||||||||||||||||||||
Current assets | $ | 396.2 | € | 298.6 | € | 301.9 | € | 318.5 | € | 364.1 | € | 407.3 | ||||||||||||
Total assets | 668.6 | 503.9 | 508.6 | 543.8 | 617.5 | 674.7 | ||||||||||||||||||
Current liabilities | 143.0 | 107.8 | 116.8 | 136.3 | 146.0 | 133.0 | ||||||||||||||||||
Long-term debt | 18.0 | 13.6 | 5.9 | 3.3 | 2.1 | 2.4 | ||||||||||||||||||
Non-controlling interest | 2.8 | 2.1 | 1.9 | 0.8 | 0.1 | 0.6 | ||||||||||||||||||
Shareholders’ equity attributable to Natuzzi S.p.A. and Subsidiaries(6) | 428.7 | 323.1 | 325.0 | 345.2 | 411.6 | 478.9 | ||||||||||||||||||
Net Asset | 431.5 | 325.2 | 326.9 | 346.0 | 411.7 | 479.5 | ||||||||||||||||||
Amounts in accordance with U.S. GAAP: | ||||||||||||||||||||||||
Total assets | $ | 674.7 | € | 508.5 | € | 521.1 | € | 560.5 | € | 627.5 | € | 674.9 | ||||||||||||
Shareholders’ equity attributable to Natuzzi S.p.A. and Subsidiaries | $ | 422.3 | € | 318.3 | € | 327.6 | € | 353.3 | € | 408.5 | € | 468.4 | ||||||||||||
Net Asset | $ | 425.1 | € | 320.4 | € | 329.5 | € | 354.1 | € | 408.6 | € | 469.0 |
1) | Income Statement amounts are converted from euros into U.S. dollars by using the average Federal Reserve Bank of New York euro exchange rate for 2010 of U.S. $1.3216 per 1 euro. Balance Sheet amounts are converted from euros into U.S. dollars using the Federal Reserve Bank of New York Noon Buying Rate of U.S. $1.3269 per 1 euro as of December 31, 2010. Source: Bloomberg (USCFEURO Index). | |
2) | Sales included under “Other” principally consist of sales of polyurethane foam and leather to third parties and sales of living room accessories. | |
3) | Other income (expense), net is principally affected by gains and losses, as well as interest income and expenses, resulting from measures adopted by the Group in an effort to reduce its exposure to exchange rate risks. See “Item 5. Operating and Financial Review and Prospects — Results of Operations — 2010 Compared to 2009,” “Item 11. Quantitative and Qualitative Disclosures about Market Risk” and Notes 3, 23 and 24 to the Consolidated Financial Statements included in Item 18 of this annual report. |
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4) | Other income (expense), net, in 2006 was negatively affected by the provisions for contingent liabilities. | |
5) | Other income (expense), net in 2008 was negatively affected by the impairment losses of long-lived assets, a one-time employee termination benefit and the provision for contingent liabilities. See Note 23 to the Consolidated Financial Statements included in Item 18 of this annual report. | |
6) | Share capital as of December 31, 2010, 2009, 2008, 2007 and 2006 amounted to €54.9 million, €54.9 million, €54.9 million, €54.8 million and €54.7 million, respectively. Shareholder’s Equity represents the Total Equity attributable to Natuzzi S.p.A and its subsidiaries. |
Year: | Average(1) | At Period End | ||||||
2006 | 1.2661 | 1.3197 | ||||||
2007 | 1.3797 | 1.4603 | ||||||
2008 | 1.4695 | 1.3919 | ||||||
2009 | 1.3955 | 1.4332 | ||||||
2010 | 1.3216 | 1.3269 |
Month ending: | High | Low | ||||||
31-Dec-10 | 1.3395 | 1.3089 | ||||||
31-Jan-11 | 1.3715 | 1.2944 | ||||||
28-Feb-11 | 1.3794 | 1.3474 | ||||||
31-Mar-11 | 1.4212 | 1.3813 | ||||||
30-Apr-11 | 1.4821 | 1.4211 | ||||||
31-May-11 | 1.4875 | 1.4015 |
(1) | The average of the Noon Buying Rates for the relevant period, calculated using the average of the Noon Buying Rates on the last business day of each month during the period. Source: Federal Reserve Statistical Release on Foreign Exchange Rates—Historical Rates for Euro Area; Bloomberg (USCFEURO Index) |
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• | price competition from low-cost manufacturers; | ||
• | continuing sluggishness of major economies, with particular reference to those in Europe; | ||
• | a sharp increase in shipping costs and raw material; and | ||
• | continuing unfavorable currency conditions. |
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• | improved quality, reliability and timeliness of information; |
• | improved integration and visibility of information stemming from different management functions and countries; and |
• | optimization and global management of corporate processes. |
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Percentage of | ||||||||
Name | ownership | Registered office | Activity | |||||
Italsofa Nordeste S/A | 100.00 | Salvador de Bahia, Brazil | (1) | |||||
Italsofa Shanghai Ltd | 96.50 | Shanghai, China | (1) | |||||
Softaly Shanghai Ltd | 100.00 | Shanghai, China | (1) | |||||
Natuzzi China Ltd | 100.00 | Shanghai, China | (1) | |||||
Italsofa Romania | 100.00 | Baia Mare, Romania | (1) | |||||
Natco S.p.A. | 99.99 | Santeramo in Colle, Italy | (2) | |||||
I.M.P.E. S.p.A. | 90.84 | Santeramo in Colle, Italy | (3) | |||||
Nacon S.p.A. | 100.00 | Santeramo in Colle, Italy | (4) | |||||
Lagene S.r.l. | 100.00 | Santeramo in Colle, Italy | (4) | |||||
Natuzzi Americas Inc. | 100.00 | High Point, NC, USA | (4) | |||||
Natuzzi Iberica S.A. | 100.00 | Madrid, Spain | (4) | |||||
Natuzzi Switzerland AG | 100.00 | Dietikon, Switzerland | (4) | |||||
Natuzzi Nordic | 100.00 | Copenhagen, Denmark | (4) | |||||
Natuzzi Benelux S.A. | 100.00 | Hereentals, Belgium | (4) | |||||
Natuzzi Germany Gmbh | 100.00 | Köln, Germany | (4) | |||||
Natuzzi Sweden AB | 100.00 | Stockholm, Sweden | (4) | |||||
Natuzzi Japan KK | 100.00 | Tokyo, Japan | (4) | |||||
Natuzzi Services Limited | 100.00 | London, UK | (4) | |||||
Natuzzi Trading Shanghai Ltd | 100.00 | Shanghai, China | (4) | |||||
Natuzzi Oceania PTI Ltd | 100,00 | Sidney, Australia | (4) | |||||
Natuzzi Russia OOO | 100,00 | Moscow, Russia | (4) | |||||
Italholding S.r.l. | 100.00 | Bari, Italy | (5) | |||||
Natuzzi Netherlands Holding | 100.00 | Amsterdam, Holland | (5) | |||||
Natuzzi Trade Service S.r.l. | 100.00 | Santeramo in Colle, Italy | (6) | |||||
La Galleria Limited | 100.00 | London, UK | (7) | |||||
Natuzzi United Kingdom Limited | 100.00 | London, UK | (7) | |||||
Kingdom of Leather Limited | 100.00 | London, UK | (7) |
(1) | Manufacture and distribution | |
(2) | Intragroup leather dyeing and finishing | |
(3) | Production and distribution of polyurethane foam | |
(4) | Services and Distribution | |
(5) | Investment holding | |
(6) | Transportation services | |
(7) | Dormant |
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1. | increasing competitiveness; |
2. | improving service to clients; |
3. | improving product quality; |
4. | striving for innovation; |
5. | the development of the new B2B trademark “Edition”, launched in 2010; |
6. | introduction of a specific “Key-Account” program that should help the Group recover market share among large customers in historical markets such as North America and, in particular, Europe; |
7. | creating more efficiency in the manufacturing and procurement process by revising product cost structures and focusing more on the R&D and engineering process; |
8. | eliminating waste and redundancies in Group processes, with a focus on increasing integration within the Group by completing the SAP rollout; and |
9. | a new commercial organization with focus on differentiation by brands, regions and distribution channels. |
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2010 | 2009 | 2008 | ||||||||||||||||||||||
Americas(1) | 164.2 | 35.7 | % | 139.8 | 31.0 | % | 208.6 | 35.5 | % | |||||||||||||||
Natuzzi brand | 15.5 | 3.4 | % | 15.3 | 3.4 | % | 19.4 | 3.3 | % | |||||||||||||||
Other(2) | 148.7 | 32.3 | % | 124.5 | 27.6 | % | 189.1 | 32.2 | % | |||||||||||||||
Europe | 238.1 | 51.7 | % | 263.7 | 58.5 | % | 323.7 | 55.1 | % | |||||||||||||||
Natuzzi brand | 145.0 | 31.5 | % | 159.9 | 35.5 | % | 196.9 | 33.5 | % | |||||||||||||||
Other(2) | 93.1 | 20.2 | % | 103.8 | 23.0 | % | 126.8 | 21.6 | % | |||||||||||||||
Rest of the world | 58.2 | 12.6 | % | 47.0 | 10.4 | % | 55.5 | 9.4 | % | |||||||||||||||
Natuzzi brand | 31.6 | 6.8 | % | 27.8 | 6.2 | % | 32.8 | 5.6 | % | |||||||||||||||
Other(2) | 26.6 | 5.8 | % | 19.2 | 4.3 | % | 22.6 | 3.9 | % | |||||||||||||||
Total | 460.5 | 100.0 | % | 450.6 | 100.0 | % | 587.8 | 100.0 | % | |||||||||||||||
(1) | Outside the United States, the Group also sells its products to customers in Canada and Central and South America (collectively, the “Americas”). | |
(2) | Starting in 2010, the “Other” item includes net sales from the “Natuzzi Editions/Editions” and “Italsofa” brands, as well as the “Unbranded” products. Therefore, net sales for the years 2008 and 2009 have been classified accordingly. |
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2010 | 2009 | 2008 | ||||||||||||||||||||||
Americas(1) | 886,471 | 45.4 | % | 785,156 | 40.8 | % | 1,272,560 | 46.7 | % | |||||||||||||||
Natuzzi brand | 40,112 | 2.1 | % | 43,520 | 2.3 | % | 69,352 | 2.5 | % | |||||||||||||||
Other(2) | 846,359 | 43.3 | % | 741,636 | 38.6 | % | 1,203,207 | 44.2 | % | |||||||||||||||
Europe | 847,451 | 43.4 | % | 943,103 | 49.0 | % | 1,211,939 | 44.5 | % | |||||||||||||||
Natuzzi brand | 370,626 | 19.0 | % | 414,876 | 21.6 | % | 529,012 | 17.9 | % | |||||||||||||||
Other(2) | 476,826 | 24.4 | % | 528,227 | 27.5 | % | 682,927 | 26.6 | % | |||||||||||||||
Rest of the world | 220,670 | 11.3 | % | 194,961 | 10.1 | % | 237,809 | 8.7 | % | |||||||||||||||
Natuzzi brand | 73,050 | 3.7 | % | 70,855 | 3.7 | % | 90,430 | 3.3 | % | |||||||||||||||
Other(2) | 147,620 | 7.6 | % | 124,106 | 6.5 | % | 147,379 | 5.4 | % | |||||||||||||||
Total | 1,954,592 | 100.0 | % | 1,923,220 | 100.0 | % | 2,722,307 | 100.0 | % | |||||||||||||||
(1) | Outside the United States, the Group also sells its products to customers in Canada and Central and South America (collectively, the “Americas”). | |
(2) | Starting in 2010, the “Other” item includes unit data from the “Natuzzi Editions/Editions” and “Italsofa” brands, as well as the “Unbranded” products. Therefore, the number of units sold for the years 2008 and 2009 have been classified accordingly. | |
(3) | Includes seats produced at Group-owned facilities and, until June 2010, also by subcontractors. Seats are a unit measurement. A sofa consists of three seats; an armchair of one. |
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2009 | ||||||||||||||||||||||||
Natuzzi brand | Other * | Total 2009 | ||||||||||||||||||||||
Country | Net Sales | % | Net Sales | % | Net Sales | % | ||||||||||||||||||
IRAN | € | 123.3 | 0.06 | % | € | 62.6 | 0.03 | % | € | 185.9 | 0.04 | % | ||||||||||||
SUDAN | € | 0.0 | 0.00 | % | € | 0.0 | 0.00 | % | € | 0.0 | 0.00 | % | ||||||||||||
SYRIA | € | 23.8 | 0.01 | % | € | 30.1 | 0.01 | % | € | 53.9 | 0.01 | % | ||||||||||||
All Other Countries | € | 202,907.4 | 99.93 | % | € | 247,409.0 | 99.96 | % | € | 450,316.4 | 99.95 | % | ||||||||||||
Total upholstery net Sales | € | 203,054.5 | 100.00 | % | € | 247,501.7 | 100.00 | % | € | 450,556.2 | 100.00 | % | ||||||||||||
2010 | ||||||||||||||||||||||||
Natuzzi brand | Other * | Total 2010 | ||||||||||||||||||||||
Country | Net Sales | % | Net Sales | % | Net Sales | % | ||||||||||||||||||
IRAN | € | 56.6 | 0.03 | % | € | 183.5 | 0.07 | % | € | 240.1 | 0.05 | % | ||||||||||||
SUDAN | € | 0.0 | 0.00 | % | € | 0.0 | 0.00 | % | € | 0.0 | 0.00 | % | ||||||||||||
SYRIA | € | 57.6 | 0.03 | % | € | 63.7 | 0.02 | % | € | 121.3 | 0.03 | % | ||||||||||||
All Other Countries | € | 192,031.8 | 99.94 | % | € | 268,136.3 | 99.91 | % | € | 460,168.2 | 99.92 | % | ||||||||||||
Total upholstery net Sales | € | 192,146.0 | 100.00 | % | € | 268,383.5 | 100.00 | % | € | 460,529.6 | 100.00 | % | ||||||||||||
* | Including “Italsofa” and “Natuzzi Editions/Editions” brands, as well as “Unbranded” products. |
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Size | Production | |||||||||||
(approximate | Capacity | Unit of | ||||||||||
Location | square meters) | Function | per day | Measure | ||||||||
Santeramo in Colle (BA) — Italy | 29,000 | Headquarters, prototyping, manufacturing of wooden frames, showroom (Owned) | 704 | Frames | ||||||||
Santeramo in Colle, Iesce (BA) — Italy | 28,000 | Sewing and product assembly (Owned) | 1.400 | Seats | ||||||||
Matera La Martella — Italy | 38,000 | General warehouse of sofas and accessory furnishing (Owned) | N.A. | N.A. | ||||||||
Ginosa (TA) — Italy | 16,000 | Sewing and product assembly (Owned) | 900 | Seats | ||||||||
Laterza (TA) — Italy | 11,000 | Leather cutting (Owned) | 7,500 | Square Meters | ||||||||
Laterza (TA) — Italy | 13,000 | Fabric and lining cutting, leather warehouse (Owned) | 6,000 | Linear Meters | ||||||||
Laterza (TA) — Italy | 20,000 | Accessory Furnishing Packaging and Warehouse (Owned) | N.A. | N.A. | ||||||||
Qualiano (NA) — Italy | 12,000 | Polyurethane foam production (Owned) | 87 | Tons | ||||||||
Pozzuolo del Friuli (UD) — Italy | 21,000 | Leather dyeing and finishing (Owned) | 14,000 | Square Meters | ||||||||
High Point — North Carolina — U.S.A. | 10,000 | Office and showroom for Natuzzi Americas (Owned) | N.A. | N.A. | ||||||||
Baia Mare — Romania | 75,600 | Leather cutting, sewing and product assembly, manufacturing of wooden frames, polyurethane foam shaping, fiberfill production and wood and wooden product manufacturing (Owned) | 2,900 | Seats | ||||||||
Shanghai — China (FENGPU) | 88,000 | Leather cutting, sewing and product assembly, manufacturing of wooden frames, polyurethane foam shaping, fiberfill production (Leased) | 3,000 | Seats | ||||||||
Shanghai (Fengpu) — China | 15,000 | Sewing and product assembly (Leased) | 700 | Seats | ||||||||
Salvador de Bahia (Bahia) — Brazil | 28,700 | Leather cutting, sewing and product assembly, manufacturing of wooden frames, polyurethane foam shaping, fiberfill production (Owned) | 700 | Seats |
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Year ending December 31, | ||||||||||||
(millions of Euro) | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Land and plants | 0.2 | 0.3 | 1.1 | |||||||||
Equipment | 13.8 | 1.6 | 5.1 | |||||||||
Other assets | 3.1 | 6.7 | 9.8 | |||||||||
Total | 17.1 | 8.6 | 16.0 | |||||||||
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Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
Cost of sales | 62.0 | 64.0 | 71.9 | |||||||||
Gross profit | 38.0 | 36.0 | 28.1 | |||||||||
Selling expenses | 29.7 | 29.0 | 25.9 | |||||||||
General and administrative expenses | 8.2 | 9.0 | 7.4 | |||||||||
Operating margin | 0.1 | (2.0 | ) | (5.2 | ) | |||||||
Other income (expense), net | (0.8 | ) | 0.6 | (3.9 | ) | |||||||
Income taxes | 1.4 | 1.9 | 0.2 | |||||||||
Net loss | (2.1 | ) | (3.3 | ) | (9.3 | ) |
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• | a net realized loss of € 3.1 million in 2010 (which was unchanged from 2009) on domestic currency swaps due to the difference between the forward rates of the domestic currency swaps and the spot rates at which the domestic currency swaps were closed (the Group uses the forward rate to hedge its price risks against unfavourable exchange rate variations); |
• | a net realized gain of € 5.8 million in 2010 (compared to a loss of € 2.4 million in 2009), from the difference between invoice exchange rates and collection/payment exchange rates; |
• | a net unrealized gain of € 0.8 million in 2010 (compared to an unrealized gain of € 7.8 million in 2009) on accounts receivable and payable; and |
• | a net unrealized loss of € 0.8 million in 2010 (compared to an unrealized gain of € 4.4 million in 2009), from the mark-to-market of domestic currency swaps. |
• | a € 3.8 million contingent-liabilities provision for estimated losses related to some claims (including tax claims) and legal actions in 2010, while in 2009, the provisions for contingent liabilities amounted to € 3.8 million; |
• | other expenses of €0.5 million deriving from the write-off of fixed assets in 2010, while in 2009, the other expenses deriving from the write off of fixed assets amounted to € 0.6 million; |
• | € 0.2 million as other expense, net in 2010, compared to other income, net of € 2.9 million in 2009. |
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• | a net realized loss of € 3.1 million in 2009 (compared to a loss of € 1.3 million in 2008) on domestic currency swaps due to the difference between the forward rates of the domestic currency swaps and the spot rates at which the domestic currency swaps were closed (the Group uses the forward rate to hedge its price risks against unfavourable exchange rate variations); | |
• | a net realized gain of € 2.1 million in 2009 (compared to a loss of € 6.3 million in 2008), from the difference between invoice exchange rates and collection/payment exchange rates; | |
• | a net unrealized gain of € 7.9 million in 2009 (compared to an unrealized gain of € 1.1 million in 2008) on accounts receivable and payable; and | |
• | a net unrealized loss of € 0.06 million in 2009 (compared to an unrealized loss of € 4.4 million in 2008), from the mark-to-market of domestic currency swaps. |
• | a € 3.8 million contingent-liabilities provision for estimated losses related to some claims (including tax claims) and legal actions in 2009, while in 2008, the provisions for contingent liabilities amounted to € 3.2 million; | |
• | other expenses of €0.6 million deriving from the write-off of fixed assets in 2009, while in 2008, the other expenses deriving from the write off of fixed assets amounted to € 1.2 million; | |
• | the Group did not record any expenses due to the impairment of long-lived assets, while in 2008 it recorded € 4.7 million for such expense; |
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• | the Group did not record any expenses for one-time termination benefits, while in 2008 it recorded € 4.6 million for such expenses; and | |
• | € 2.9 million as other income, net in 2009, compared to other expenses, net of € 0.8 million in 2008. |
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Payments Due by Period (thousands of euro) | ||||||||||||||||||||
Less than 1 | After 5 | |||||||||||||||||||
Contractual Obligations | Total | year | 2-3 years | 4-5 years | years | |||||||||||||||
Long-Term Debt(1) | 15,414 | 1,831 | 6,756 | 5,497 | 1,330 | |||||||||||||||
Interest due on Long Term Debt(2) | 772 | 251 | 366 | 134 | 21 | |||||||||||||||
Operating Leases(3) | 135,172 | 19,036 | 38,636 | 39,997 | 37,503 | |||||||||||||||
Total Contractual Cash Obligations | 151,358 | 21,118 | 45,758 | 45,628 | 38,854 |
(1) | Please see Note 16 to the Consolidated Financial Statements included in Item 18 of this annual report for more information on the Group’s long-term debt. | |
(2) | Interest due on long-term debt has been calculated using fixed rates contractually agreed with lenders | |
(3) | The leases relate to the leasing of manufacturing facilities and stores by several of the Group’s companies. |
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Name | Age | Position with the Company | ||||
Pasquale Natuzzi * | 71 | Chairman of the Board of Directors, Chief Executive Officer | ||||
Antonia Isabella Perrone * | 41 | Director | ||||
Annamaria Natuzzi * | �� | 44 | Director | |||
Giuseppe Antonio D’Angelo * | 45 | Outside Director | ||||
Maurizia Iachino Leto di Priolo * | 61 | Outside Director | ||||
Giuseppe Desantis* | 49 | Outside Director | ||||
Pietro Scott Jovane* | 42 | Outside Director | ||||
Giuseppe Marino* | 46 | Outside Director | ||||
Andrea Martinelli* | 64 | Outside Director | ||||
Vittorio Notarpietro | 48 | Chief Financial Officer | ||||
Fernando Rizzo | 46 | Chief Human Resources and Organization Officer | ||||
Clemente Giuseppe | 45 | Chief Operation Officer | ||||
Giuseppe Cacciapaglia | 43 | Chief Internal Control Systems Officer | ||||
Cosimo Cavallo | 51 | Chief Editions & Softaly Division | ||||
Giambattista Massaro | 48 | Chief Procurement Officer | ||||
Stefano Sette | 42 | Chief Research & Development Officer | ||||
Giacomo Ventolone | 43 | Chief Institutional Relations & Corporate Communication Officer | ||||
Angelo Colacicco | 42 | Chief Information Officer | ||||
Massimiliano Quatraro | 37 | Chief Legal & Corporate Affairs Officer | ||||
Simon Hughes | 51 | Chief Natuzzi & Italsofa Division(Consultant) |
* | The above mentioned Members of the Board of Directors were elected at the Company’s Annual General Shareholders’ Meeting held on April 28, 2011. |
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Name | Base Compensation | |||
Pasquale Natuzzi | € | 221,411 | ||
Antonia Isabella Perrone | € | 35,343 | ||
Annamaria Natuzzi | € | 35,343 | ||
Giuseppe Antonio D’Angelo | € | 35,343 | ||
Maurizia Iachino Leto di Priolo | € | 35,343 | ||
Francesco Giannaccari | € | 33,399 | ||
Mario Lugli | € | 35,343 | ||
Giacomo Santucci | € | 35,343 |
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Name | Position | |
Carlo Gatto | Chairman | |
Gianvito Giannelli | Member | |
Cataldo Sferra | Member | |
Costante Leone | Alternate | |
Giuseppe Pio Macario | Alternate |
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Change between | ||||||||||||
Qualification | 2009 | 2010 | 2009 and 2010 | |||||||||
Top managers | 61 | 57 | -4 | |||||||||
Middle managers | 141 | 121 | -20 | |||||||||
Employees | 1.125 | 1.234 | 109 | |||||||||
Blue collars | 5.608 | 5.354 | -254 | |||||||||
Total | 6,935 | 6,766 | -169 |
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• | has launched a new organization, called “6x3 Brand Strategy,” with a focus on differentiation by brands, regions and distribution channels. The launch of this new organization has been considered necessary in order to assign clear responsibilities to people in achieving expected results within each macro-division. For the Group, this new organization is supposed to ensure the creation of value for consumers and stakeholders at all levels; | |
• | will be launching at a worldwide level an integrated ERP system for human resources management through a structured management and computerization of HR processes. The construction of a staff list database at a worldwide level will help to create a Business Intelligence and Reporting Integrated System and support Company decision-making on strategic issues;and | |
• | has confirmed the initiatives of retraining and re-qualification for workers participating in CIGS, in order to facilitate a more effective reintegration of such workers in the workplace through structured paths in the fields of IT and workplace safety. |
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Number of | Percent | |||||||
Shares Owned | Owned | |||||||
Pasquale Natuzzi(1) | 29,358,089 | 53.5 | % | |||||
Schroder Investment Management North America Ltd.(2) | 3,904,681 | 7.1 | % | |||||
Quaeroq CVBA (3) | 2,760,400 | 5.0 | % |
(1) | Includes ADSs purchased on April 18, 2008. If Mr. Natuzzi’s Ordinary Shares are aggregated with those held by members of the Natuzzi Family, the amount owned would be 32,158,091 and the percentage ownership of Ordinary Shares would be 58.7%. | |
(2) | According to the Schedule 13G filed with the SEC by Schroder Invetsment Management North America on February 23, 2011. | |
(3) | According to the Schedule 13G filed with the SEC by Quaeroq CVBA on November 18, 2008. |
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Price per ADS (in US dollars) | ||||||||
High | Low | |||||||
2006 | 8.65 | 6.32 | ||||||
2007 | 9.60 | 4.36 | ||||||
2008 | 4.63 | 1.63 | ||||||
2009 | 3.51 | 1.00 | ||||||
2010 | 5.76 | 2.78 |
2008 | High | Low | ||||||
First quarter | 4.63 | 3.20 | ||||||
Second quarter | 4.10 | 3.16 | ||||||
Third quarter | 4.04 | 2.61 | ||||||
Fourth quarter | 3.43 | 1.63 |
2009 | High | Low | ||||||
First quarter | 1.96 | 1.00 | ||||||
Second quarter | 2.30 | 1.00 | ||||||
Third quarter | 2.79 | 1.75 | ||||||
Fourth quarter | 3.51 | 2.60 |
2010 | High | Low | ||||||
First quarter | 5.76 | 3.258 | ||||||
Second quarter | 4.987 | 2.95 | ||||||
Third quarter | 3.71 | 2.78 | ||||||
Fourth quarter | 3.80 | 3.04 |
Monthly data | High | Low | ||||||
December 2010 | 3.31 | 3.07 | ||||||
January 2011 | 3.79 | 3.12 | ||||||
February 2011 | 4.72 | 3.75 | ||||||
March 2011 | 4.65 | 4.00 | ||||||
April 2011 | 4.75 | 4.20 | ||||||
May 2011 | 4.56 | 3.64 | ||||||
June 2011 (through June 24) | 3.71 | 3.42 |
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Euro equivalent of contractual amounts of | December 31, | |||||||
forward exchange contracts as of | 2010 | 2009 | ||||||
U.S. dollars | € | 30,604 | € | 15,323 | ||||
Euro | 12,200 | 10,714 | ||||||
Canadian dollars | 12,081 | 1,915 | ||||||
British pounds | 8,838 | 6,652 | ||||||
Australian dollars | 7,149 | 5,164 | ||||||
Japanese yen | 2,310 | 311 | ||||||
Swiss francs | 1,584 | 795 | ||||||
Norwegian kroner | 1,091 | 718 | ||||||
Swedish kroner | 919 | 587 | ||||||
Danish kroner | 497 | 470 | ||||||
Total | € | 77,273 | € | 42,649 | ||||
Euro equivalent* of contractual amounts of | December 31, | |||||||
zero-costs collar options as of | 2010 | 2009 | ||||||
U.S. dollars | € | 2,847 | € | 8,095 | ||||
Total | € | 2,847 | € | 8,095 | ||||
* | The euro equivalent is prudentially evaluated at the upper strike-price of each “zero-cost collar.” Depending on the market price of the EURUSD exchange rate at every single maturity, the euro equivalent (in thousands) coming from the exercise of the options would range from€ 2,847 to€ 3,012. |
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December 31, 2010 | December 31, 2009 | |||||||||||||||
Contract | Unrealized | Contract | Unrealized | |||||||||||||
Amount | gains (losses) | Amount | gains (losses) | |||||||||||||
Assets | 40,981 | 171 | 13,281 | 318 | ||||||||||||
Liabilities | 39,139 | (1,059 | ) | 37,463 | (380 | ) | ||||||||||
Total | € | 80,120 | € | (888 | ) | € | 50,744 | € | (62 | ) | ||||||
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Natuzzi S.p.A. and Subsidiaries
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2010 | 2009 | |||||||
(Expressed in thousands of euros) | ||||||||
Audit fees | 821 | 1,056 | ||||||
Audit-related fees | — | — | ||||||
Tax fees | 86 | — | ||||||
Other fees | — | — | ||||||
Total fees | 907 | 1,056 | ||||||
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1) | the board of statutory auditors is established and selected pursuant to Italian law expressly permitting such a board; |
2) | the board of statutory auditors is required under Italian law to be separate from the Company’s Board of Directors; |
3) | the board of statutory auditors is not elected by management of the Company and no executive officer of the Company is a member of the board of statutory auditors; |
4) | Italian law provides for standards for the independence of the board of statutory auditors from the Company and its management; |
5) | the board of statutory auditors, in accordance with applicable Italian law and the Company’s governing documents, is responsible, to the extent permitted by Italian law, for the appointment, retention and oversight of the work (including, to the extent permitted by law, the resolution of disagreements between management and the auditor regarding financial reporting) of any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company, and |
6) | to the extent permitted by Italian law, the audit committee requirements of paragraphs (b)(3), (b)(4) and (b)(5) of Rule 10A-3 apply to the Board of Statutory Auditors. |
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Page | ||||
Index to Consolidated Financial Statements | ||||
F-1 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 |
1.1 | English translation of the by-laws (Statuto) of the Company, as amended and restated as of January 24, 2008 (incorporated by reference to the Form 20-F filed by Natuzzi S.p.A. with the Securities Exchange Commission on June 30, 2008, file number 1-11854). |
2.1 | Deposit Agreement dated as of May 15, 1993, as amended and restated as of December 31, 2001, among the Company, The Bank of New York, as Depositary, and owners and beneficial owners of ADRs (incorporated by reference to the Form 20-F filed by Natuzzi S.p.A. with the Securities and Exchange Commission on July 1, 2002, file number 1-11854). |
8.1 | List of Significant Subsidiaries. |
12.1 | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
12.2 | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
13.1 | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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Natuzzi S.p.A. and Subsidiaries
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To the Shareholders of Natuzzi S.p.A.
We have audited the accompanying consolidated balance sheet of Natuzzi S.p.A. and subsidiaries (the ‘Natuzzi Group’) as of December 31, 2009, and the related consolidated statements of operations, changes in shareholders’ equity and cash flows for each of the years in the two-year period ended December 31, 2009. These consolidated financial statements are the responsibility of the management of Natuzzi S.p.A.. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Natuzzi Group as of December 31, 2009, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2009, in conformity with established accounting principles in the Republic of Italy.
Established accounting principles in the Republic of Italy vary in certain significant respects from generally accepted accounting principles in the United States of America. Information relating to the nature and effect of such differences is presented in note 26 to the consolidated financial statements.
KPMG S.p.A.
Bari, Italy
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Dec. 31, 2010 | Dec. 31, 2009 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents (note 4) | 61,094 | 66,330 | ||||||
Marketable securities (note 5) | 4 | 4 | ||||||
Trade receivables, net (note 6) | 95,815 | 97,045 | ||||||
Other receivables (note 7) | 51,709 | 54,538 | ||||||
Inventories (note 8) | 87,355 | 81,565 | ||||||
Unrealized foreign exchange gain (note 24) | 171 | 318 | ||||||
Prepaid expenses and accrued income | 1,334 | 1,415 | ||||||
Deferred income taxes (note 14) | 1,078 | 702 | ||||||
Total current assets | 298,560 | 301,917 | ||||||
Non current assets: | ||||||||
Property plant and equipment (note 9) | 422,025 | 405,276 | ||||||
Less (accumulated depreciation) | (226,074 | ) | (211,442 | ) | ||||
Net property, plant and equipment (note 21) | 195,951 | 193,834 | ||||||
Other assets (note 10) | 9,345 | 12,813 | ||||||
Deferred income taxes (note 14) | — | — | ||||||
Total assets | 503,856 | 508,564 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Bank Overdrafts (note 11) | 83 | 760 | ||||||
Current portion of long-term debt (note 16) | 1,831 | 1,124 | ||||||
Accounts payable-trade (note 12) | 64,317 | 66,499 | ||||||
Accounts payable-other (note 13) | 27,617 | 29,266 | ||||||
Unrealized foreign exchange losses (note 24) | 1,059 | 380 | ||||||
Income taxes (note 14) | 2,952 | 3,708 | ||||||
Salaries, wages and related liabilities (note 15) | 9,909 | 15,054 | ||||||
Total current liabilities | 107,768 | 116,791 | ||||||
Long-term liabilities: | ||||||||
Employees’ leaving entitlement (note 3 (n) ) | 28,412 | 29,565 | ||||||
Long-term debt (note 16) | 13,583 | 5,857 | ||||||
Deferred income taxes (note 14) | — | 47 | ||||||
Deferred income for capital grants (note 3(m)) | 10,358 | 11,208 | ||||||
Other liabilities (note 17) | 18,504 | 18,209 | ||||||
Shareholders’ equity (note 18): | ||||||||
Share capital | 54,853 | 54,853 | ||||||
Reserves | 42,780 | 42,780 | ||||||
Additional paid-in capital | 8,282 | 8,282 | ||||||
Retained earnings | 217,204 | 219,112 | ||||||
Total equity attributable to Natuzzi S.p.A. and Subsidiaries | 323,119 | 325,027 | ||||||
Non-controlling interest (note 18) | 2,112 | 1,860 | ||||||
Total Shareholders’ equity | 325,231 | 326,887 | ||||||
Commitments and contingent liabilities (notes 20 and 23) | — | — | ||||||
Total liabilities and Shareholders’ equity | 503,856 | 508,564 | ||||||
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Years ended December 31, 2010, 2009 and 2008
(Expressed in thousands of euros except per share data)
2010 | 2009 | 2008 | ||||||||||
Net sales (note 21) | 518,634 | 515,352 | 666,026 | |||||||||
Cost of sales (note 22) | (321,501 | ) | (329,742 | ) | (478,770 | ) | ||||||
Gross profit | 197,133 | 185,610 | 187,256 | |||||||||
Selling expenses | (154,267 | ) | (149,596 | ) | (172,338 | ) | ||||||
General and administrative expenses | (42,468 | ) | (46,585 | ) | (49,914 | ) | ||||||
Operating income/(loss) | 398 | (10,571 | ) | (34,996 | ) | |||||||
Other income/(expense), net (note 23) | (4,427 | ) | 3,121 | (25,818 | ) | |||||||
Earning/(loss) before taxes and non-controlling interest | (4,029 | ) | (7,450 | ) | (60,814 | ) | ||||||
Income taxes (note 14) | (6,952 | ) | (9,802 | ) | (1,556 | ) | ||||||
Net income/(loss) | (10,981 | ) | (17,252 | ) | (62,370 | ) | ||||||
Net (Income)/loss attributable to Non-controlling interest | (97 | ) | (434 | ) | 432 | |||||||
Net Income/(loss) attributable to Natuzzi S.p.A. and Subsidiares | (11,078 | ) | (17,686 | ) | (61,938 | ) | ||||||
Basic loss per share (note 3 (y)) | (0.20) | (0.32) | (1.13) | |||||||||
Diluted loss per share (note 3 (y)) | (0.20) | (0.32) | (1.13) |
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Additio | Equity | |||||||||||||||||||||||||||||||
Number of | Share | nal paid | attributable | Non- | Total Share | |||||||||||||||||||||||||||
ordinary | Capital | in | Retained | to Natuzzi | controlling | holders’ | ||||||||||||||||||||||||||
shares | Amount | Reserves | capital | earnings | S.p.A. | interest | equity | |||||||||||||||||||||||||
Balances at December 31, 2007 | 54,824,227 | 54,824 | 42,292 | 8,282 | 306,199 | 411,597 | 146 | 411,743 | ||||||||||||||||||||||||
Majority Shareholder contribution | 488 | 488 | 488 | |||||||||||||||||||||||||||||
Increase in share capital | 28,818 | 29 | (29 | ) | ||||||||||||||||||||||||||||
Exchange difference on translation of financial statement | (4,929 | ) | (4,929 | ) | (1,081 | ) | (3,848 | ) | ||||||||||||||||||||||||
Net loss | (61,938 | ) | (61,938 | ) | (432 | ) | (62,370 | ) | ||||||||||||||||||||||||
Balances at December 31, 2008 | 54,853,045 | 54,853 | 42,780 | 8,282 | 239,303 | 345,218 | 795 | 346,013 | ||||||||||||||||||||||||
Exchange difference on translation of financial statement | (2,505 | ) | (2,505 | ) | (45 | ) | (2,550 | ) | ||||||||||||||||||||||||
Purchase non-controlling Interest | (23 | ) | (23 | ) | ||||||||||||||||||||||||||||
Increase for capital contribution of non-controlling interest | 699 | 699 | ||||||||||||||||||||||||||||||
Net Income (loss) | (17,686 | ) | (17,686 | ) | 434 | (17,252 | ) | |||||||||||||||||||||||||
Balances at December 31, 2009 | 54,853,045 | 54,853 | 42,780 | 8,282 | 219,112 | 325,027 | 1,860 | 326,887 | ||||||||||||||||||||||||
Exchange difference on translation of financial statement | 9,170 | 9,170 | 155 | 9,325 | ||||||||||||||||||||||||||||
Net Income (loss) | (11,078 | ) | (11,078 | ) | 97 | (10,981 | ) | |||||||||||||||||||||||||
Balances at December 31, 2010 | 54,853,045 | 54,853 | 42,780 | 8,282 | 217,204 | 323,119 | 2,112 | 325,231 | ||||||||||||||||||||||||
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2010 | 2009 | 2008 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net income/(loss) attributable to Natuzzi S.p.A. and Subsidiares | (11,078 | ) | (17,686 | ) | (61,938 | ) | ||||||
Adjustment to reconcile net income/(loss) to net cash provided by/(used in) operating activities | ||||||||||||
Non-controlling interest | 97 | 434 | (432 | ) | ||||||||
Depreciation and amortization | 23,419 | 26,565 | 31,086 | |||||||||
Write off of Fixed Assets | — | 595 | 1,189 | |||||||||
Impairment of long lived Assets | — | — | 4,703 | |||||||||
Employees’ leaving entitlement | 6,521 | 6,525 | 7,026 | |||||||||
Deferred income taxes | (313 | ) | 3,743 | (3,107 | ) | |||||||
Loss on disposal of assets | 496 | 492 | 284 | |||||||||
Unrealized foreign exchange (gain)/losses | 1,038 | (4,409 | ) | 5,417 | ||||||||
Deferred income for capital grants | (748 | ) | (850 | ) | (1,274 | ) | ||||||
Change in assets and liabilities: | ||||||||||||
Receivables, net | 1,232 | 16,903 | (3,462 | ) | ||||||||
Inventories | (5,791 | ) | 10,842 | 14,916 | ||||||||
Prepaid expenses and accrued income | 78 | (157 | ) | 588 | ||||||||
Accounts payable | 2,600 | (4,766 | ) | (21,372 | ) | |||||||
Income taxes | (504 | ) | 1,910 | 213 | ||||||||
Salaries, wages and related liabilities | (5,235 | ) | (1,832 | ) | (720 | ) | ||||||
Other liabilities | (1,778 | ) | 3,795 | 3,576 | ||||||||
Employees’ leaving entitlement | (7,674 | ) | (8,637 | ) | (8,692 | ) | ||||||
Total adjustments | 13,438 | 51,153 | 29,939 | |||||||||
Net cash provided by/(used in) operating activities | 2,360 | 33,467 | (31,999 | ) | ||||||||
Cash flows from investing activities: | ||||||||||||
Property, plant and equipment: | ||||||||||||
Additions | (14,006 | ) | (4,191 | ) | (11,884 | ) | ||||||
Disposals | 1,122 | 1,137 | 174 | |||||||||
Other assets | (3,046 | ) | (4,382 | ) | (4,097 | ) | ||||||
(Purchase)/Disposal of business, net of cash acquired | — | (1,040 | ) | 2,262 | ||||||||
Net cash used in investing activities | (15,930 | ) | (8,476 | ) | (13,545 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Long-term debt: | ||||||||||||
Proceeds | 9,557 | 3,900 | 2,038 | |||||||||
Repayments | (1,124 | ) | (699 | ) | (691 | ) | ||||||
Short-term borrowings | (678 | ) | (8,941 | ) | 2,125 | |||||||
Majority Shareholder Capital Contribution | — | — | 488 | |||||||||
Net cash provided by/(used in) financing activities | 7,755 | (5,740 | ) | 3,960 | ||||||||
Effect of translation adjustments on cash | 579 | (228 | ) | 1,432 | ||||||||
Increase/(decrease) in cash and cash equivalents | (5,236 | ) | 19,023 | (40,152 | ) | |||||||
Cash and cash equivalents, beginning of the year | 66,330 | 47,307 | 87,459 | |||||||||
Cash and cash equivalents, end of the year | 61,094 | 66,330 | 47,307 | |||||||||
Supplemental disclosure of cash flow information: | ||||||||||||
Cash paid during the year for interest | 155 | 130 | 327 | |||||||||
Cash paid during the year for income taxes | 9,146 | 5,258 | 1,399 |
F-6
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Percent of | Registered | |||||||||||
Name | ownership | office | Activity | |||||||||
Italsofa Nordeste S.A. | 100.00 | Salvador, Brazil | (1 | ) | ||||||||
Italsofa Shanghai Ltd | 96.50 | Shanghai, China | (1 | ) | ||||||||
Softaly Shanghai Ltd | 100.00 | Shanghai, China | (1 | ) | ||||||||
Natuzzi China Ltd. | 100.00 | Shanghai, China | (1 | ) | ||||||||
Italsofa Romania | 100.00 | Baia Mare, Romania | (1 | ) | ||||||||
Natco S.p.A. | 99.99 | Bari, Italy | (2 | ) | ||||||||
I.M.P.E. S.p.A. | 90.84 | Qualiano,Italy | (3 | ) | ||||||||
Nacon S.p.A. | 100.00 | Bari, Italy | (4 | ) | ||||||||
Lagene S.r.l. | 100.00 | Bari, Italy | (4 | ) | ||||||||
Natuzzi Americas Inc. | 100.00 | High Point, NC, USA | (4 | ) | ||||||||
Natuzzi Iberica S.A. | 100.00 | Madrid, Spain | (4 | ) | ||||||||
Natuzzi Switzerland AG | 100.00 | Kaltbrunn, Switzerland | (4 | ) | ||||||||
Natuzzi Nordic | 100.00 | Copenaghen, Denmark | (4 | ) | ||||||||
Natuzzi Benelux S.A. | 100.00 | Geel, Belgium | (4 | ) | ||||||||
Natuzzi Germany Gmbh | 100.00 | Dusseldorf, Germany | (4 | ) | ||||||||
Natuzzi Sweden AB | 100.00 | Stockholm, Sweden | (4 | ) | ||||||||
Natuzzi Japan KK | 100.00 | Tokyo, Japan | (4 | ) | ||||||||
Natuzzi Services Limited | 100.00 | London, UK | (4 | ) | ||||||||
Natuzzi Trading Shanghai Ltd | 100.00 | Shanghai, China | (4 | ) | ||||||||
Natuzzi Oceania Ltd | 100.00 | Sidney, Australia | (4 | ) | ||||||||
Natuzzi Russia OOO | 100.00 | Moscow, Russia | (4 | ) | ||||||||
Italholding S.r.l. | 100.00 | Bari, Italy | (5 | ) | ||||||||
Natuzzi Netherlands Holding | 100.00 | Amsterdam, Holland | (5 | ) | ||||||||
Natuzzi Trade Service S.r.l. | 100.00 | Bari, Italy | (6 | ) | ||||||||
Natuzzi United Kingdom Limited | 100.00 | London, UK | (7 | ) | ||||||||
Kingdom of Leather Limited | 100.00 | London, UK | (7 | ) | ||||||||
La Galleria Limited | 100.00 | London, UK | (7 | ) |
(1) | Manufacture and distribution | |
(2) | Intragroup leather dyeing and finishing | |
(3) | Production and distribution of polyurethane foam | |
(4) | Distribution | |
(5) | Investment holding | |
(6) | Transportation services | |
(7) | Dormant |
F-7
Table of Contents
Goodwill | 85 | |||
Current assets | 40 | |||
Purchase price | 125 | |||
F-8
Table of Contents
Goodwill | 566 | |||
Fixed assets | 42 | |||
Current assets | 358 | |||
Current liabilities | (74 | ) | ||
Purchase price | 892 | |||
F-9
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F-10
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F-11
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F-12
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F-13
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F-14
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F-15
Table of Contents
2010 | 2009 | 2008 | ||||||||||
Net earnings (loss) attributable to ordinary shareholders | (11,078 | ) | (17,686 | ) | (61,938 | ) | ||||||
Weighted-average number of ordinary shares outstanding during the year | 54,853,045 | 54,853,045 | 54,850,643 | |||||||||
Increase resulting from assumed conversion of share grants and options | — | — | — | |||||||||
Weighted-average number of ordinary shares and potential shares outstanding during the year | 54,853,045 | 54,853,045 | 54,850,643 | |||||||||
2010 | 2009 | |||||||
Cash on hand | 248 | 176 | ||||||
Bank accounts in Euro | 42,668 | 22,974 | ||||||
Bank accounts in foreign currencies | 18,178 | 43,180 | ||||||
Total | 61,094 | 66,330 | ||||||
2010 | 2009 | |||||||
Foreign corporate bonds | 4 | 4 | ||||||
Total | 4 | 4 | ||||||
F-16
Table of Contents
Gross unrealized | Fair | |||||||||||||||
2010 | Cost | Gains | Losses | value | ||||||||||||
Foreign corporate bonds | 4 | — | — | 4 | ||||||||||||
Total | 4 | — | — | 4 | ||||||||||||
Gross unrealized | Fair | |||||||||||||||
2009 | Cost | Gains | Losses | value | ||||||||||||
Foreign corporate bonds | 4 | — | — | 4 | ||||||||||||
Total | 4 | — | — | 4 | ||||||||||||
2010 | 2009 | |||||||
North American customers | 35,930 | 33,778 | ||||||
Other foreign customers | 43,766 | 46,951 | ||||||
Domestic customers | 25,486 | 21,731 | ||||||
Trade bills receivable | 6 | 3,915 | ||||||
Total | 105,188 | 106,375 | ||||||
Allowance for doubtful accounts | (9,373 | ) | (9,330 | ) | ||||
Total trade receivables, net | 95,815 | 97,045 | ||||||
Trade receivables | N° of customers | % on trade receivables | ||||||
2010 | 2 | 16 | % | |||||
2009 | 2 | 14 | % | |||||
2008 | 2 | 16 | % |
F-17
Table of Contents
Net sales | N° of customers | % net sales | ||||||
2010 | 2 | 20 | % | |||||
2009 | 2 | 17 | % | |||||
2008 | 2 | 22 | % |
2010 | 2009 | 2008 | ||||||||||
Balance, beginning of year | 9,330 | 8,615 | 5,699 | |||||||||
Charges-bad debt expense | 430 | 1,859 | 3,550 | |||||||||
Reductions-write off of uncollectible accounts | (387 | ) | (1,144 | ) | (634 | ) | ||||||
Balance, end of year | 9,373 | 9,330 | 8,615 | |||||||||
2010 | 2009 | |||||||
U.S. dollars | 29,799 | 27,354 | ||||||
Canadian dollars | 7,357 | 9,517 | ||||||
British pounds | 5,397 | 5,417 | ||||||
Australian dollars | 4,384 | 4,883 | ||||||
Other currencies | 5,669 | 3,704 | ||||||
Total | 52,606 | 50,875 | ||||||
F-18
Table of Contents
2010 | 2009 | |||||||
Receivable from National Institute for Social Security | 16,057 | 19,626 | ||||||
Government capital grants | 7,518 | 10,213 | ||||||
VAT | 8,703 | 7,246 | ||||||
Receivable from tax authorities | 5,069 | 7,024 | ||||||
Advances to suppliers | 5,118 | 2,608 | ||||||
Other | 9,244 | 7,821 | ||||||
Total | 51,709 | 54,538 | ||||||
2010 | 2009 | |||||||
Leather and other raw materials | 47,760 | 42,802 | ||||||
Goods in process | 11,323 | 12,254 | ||||||
Finished products | 28,272 | 26,509 | ||||||
Total | 87,355 | 81,565 | ||||||
F-19
Table of Contents
Cost or | Accumulated | Annual rate of | ||||||||||
2010 | valuation | depreciation | depreciation | |||||||||
Land and industrial buildings | 197,812 | (58,861 | ) | 0 – 10 | % | |||||||
Machinery and equipment | 117,452 | (97,922 | ) | 10 – 25 | % | |||||||
Airplane | 24,075 | (9,389 | ) | 3 | % | |||||||
Office furniture and equipment | 24,053 | (22,394 | ) | 10 – 20 | % | |||||||
Retail gallery and store furnishings | 32,258 | (27,324 | ) | 25 – 35 | % | |||||||
Transportation equipment | 5,411 | (4,695 | ) | 20 – 25 | % | |||||||
Leasehold improvements | 9,381 | (5,489 | ) | 10 – 20 | % | |||||||
Construction in progress | 11,583 | — | — | |||||||||
Total | 422,025 | (226,074 | ) | |||||||||
Cost or | Accumulated | Annual rate of | ||||||||||
2009 | valuation | depreciation | depreciation | |||||||||
Land and industrial buildings | 193,700 | (54,590 | ) | 0 – 10 | % | |||||||
Machinery and equipment | 118,122 | (93,245 | ) | 10 – 25 | % | |||||||
Airplane | 24,075 | (8,667 | ) | 3 | % | |||||||
Office furniture and equipment | 23,420 | (21,120 | ) | 10 – 20 | % | |||||||
Retail gallery and store furnishings | 31,058 | (24,217 | ) | 25 – 35 | % | |||||||
Transportation equipment | 5,821 | (4,941 | ) | 20 – 25 | % | |||||||
Leasehold improvements | 8,508 | (4,662 | ) | 10 – 20 | % | |||||||
Construction in progress | 572 | — | — | |||||||||
Total | 405,276 | (211,442 | ) | |||||||||
F-20
Table of Contents
F-21
Table of Contents
2010 | 2009 | |||||||
Software and other | 32,698 | 28,952 | ||||||
Goodwill | 9,136 | 9,136 | ||||||
Equity in affiliated enterprise | 1,429 | 1,429 | ||||||
Total, gross | 43,263 | 39,517 | ||||||
Less accumulated amortization | (33,918 | ) | (26,704 | ) | ||||
Total, net | 9,345 | 12,813 | ||||||
Gross carrying | Accumulated | Net book | ||||||||||
2010 | amount | depreciation | value | |||||||||
Software | 19,884 | (14,345 | ) | 5,539 | ||||||||
Trademarks, patents and other | 12,814 | (11,148 | ) | 1,666 | ||||||||
Total | 32,698 | (25,493 | ) | 7,205 | ||||||||
Gross carrying | Accumulated | Net book | ||||||||||
2009 | amount | depreciation | value | |||||||||
Software | 21,276 | (13,746 | ) | 7,530 | ||||||||
Trademarks, patents and other | 7,676 | (6,048 | ) | 1,628 | ||||||||
Total | 28,952 | (19,794 | ) | 9,158 | ||||||||
F-22
Table of Contents
2010 | 2009 | |||||||
Gross carrying amount | 9,136 | 9,136 | ||||||
Less accumulated depreciation | (8,425 | ) | (6,910 | ) | ||||
Net book value | 711 | 2,226 | ||||||
Balance as of December 31, 2008 | 3,403 | |||
Acquisition of four retail stores | 651 | |||
Amortization | (1,828 | ) | ||
Balance as of December 31, 2009 | 2,226 | |||
Amortization | (1,515 | ) | ||
Balance as of December 31, 2010 | 711 | |||
2010 | 2009 | |||||||
Bank overdrafts | 83 | 760 |
2010 | 2009 | 2008 | ||||||||||
Bank borrowings | — | — | 6.22 | % | ||||||||
Bank overdrafts | 1.27 | % | 1.18 | % | 3.31 | % |
F-23
Table of Contents
2010 | 2009 | |||||||
Provision for warranties | 8,661 | 8,706 | ||||||
Advances from customers | 7,221 | 6,820 | ||||||
Cooperative advertising and quantity discount | 4,381 | 4,376 | ||||||
Withholding taxes on payroll and on others | 2,636 | 2,571 | ||||||
Other | 4,718 | 6,793 | ||||||
Total | 27,617 | 29,266 | ||||||
2010 | 2009 | 2008 | ||||||||||
Balance, beginning of year | 8,706 | 10,717 | 8,627 | |||||||||
Charges to profit and loss | 2,112 | 227 | 4,735 | |||||||||
Reductions for utilization | (2,157 | ) | (2,238 | ) | (2,645 | ) | ||||||
Balance, end of year | 8,661 | 8,706 | 10,717 | |||||||||
2010 | 2009 | 2008 | ||||||||||
IRES (state tax) | 27.50 | % | 27.50 | % | 27.50 | % | ||||||
IRAP (regional tax) | 3.90 | % | 3.90 | % | 3.90 | % |
F-24
Table of Contents
2010 | 2009 | 2008 | ||||||||||
Domestic | (11,414 | ) | (36,319 | ) | (30,986 | ) | ||||||
Foreign | 7,385 | 28,869 | (29,828 | ) | ||||||||
Total | (4,029 | ) | (7,450 | ) | (60,814 | ) | ||||||
F-25
Table of Contents
2010 | 2009 | 2008 | ||||||||||
Expected income tax (benefit) expense charge at full tax rates | (1,108 | ) | (2,049 | ) | (16,724 | ) | ||||||
Effects of: | ||||||||||||
- Tax exempt income | (1,376 | ) | (2,570 | ) | (2,489 | ) | ||||||
- Aggregate effect of different tax rates in foreign jurisdictions | (2,183 | ) | (2,855 | ) | (3,258 | ) | ||||||
- Italian regional tax | 1,951 | 1,304 | 2,057 | |||||||||
- Expiration and write off tax loss carry-forwards | 1,080 | — | — | |||||||||
- Non-deductible expenses | 2,987 | 2,194 | 3,384 | |||||||||
- Provisions for contingent liabilities | — | 380 | 373 | |||||||||
- Depreciation and impairment of goodwill | 5 | 5 | 228 | |||||||||
- Effect of net change in valuation allowance established against deferred tax assets | 5,229 | 13,121 | 18,799 | |||||||||
- Tax effect of unremitted earnings | 366 | 271 | (814 | ) | ||||||||
Actual tax charge | 6,952 | 9,802 | 1,556 | |||||||||
2010 | 2009 | 2008 | ||||||||||
Current: | ||||||||||||
Italian | 1,980 | 1,684 | 2,057 | |||||||||
Foreign | 5,285 | 4,375 | 2,606 | |||||||||
Total (a) | 7,265 | 6,059 | 4,663 | |||||||||
Deferred: | ||||||||||||
Italian | — | — | — | |||||||||
Foreign | (313 | ) | 3,743 | (3,107 | ) | |||||||
Total (b) | (313 | ) | 3,743 | (3,107 | ) | |||||||
Total (a + b) | 6,952 | 9,802 | 1,556 | |||||||||
F-26
Table of Contents
2010 | 2009 | |||||||
Deferred tax assets: | ||||||||
- Tax loss carry-forwards | 58,424 | 62,240 | ||||||
- Provision for warranties | 2,649 | 2,501 | ||||||
- Allowance for doubtful accounts | 3,394 | 2,663 | ||||||
- Unrealized net losses on foreign exchange | 1,013 | 833 | ||||||
Impairment loss of long-lived assets and others on fixed assets | 2,177 | 1,959 | ||||||
- One-time termination benefits and others on personnel | 666 | 562 | ||||||
- Inventory obsolescence | 1,585 | 1,439 | ||||||
- Goodwill | 1,768 | 1,384 | ||||||
- Intercompany profit on inventory | 770 | 1,041 | ||||||
- Provision for contingent liabilities | 1,049 | 1,163 | ||||||
- Provision for sales representatives | 386 | 392 | ||||||
- Other temporary differences | 707 | 1,092 | ||||||
Total gross deferred tax assets | 74,588 | 77,269 | ||||||
- Less valuation allowance | (71,552 | ) | (74,626 | ) | ||||
Net deferred tax assets (a) | 3,036 | 2,643 | ||||||
Deferred tax liabilities: | ||||||||
- Unrealized net gains on foreign exchange | — | (562 | ) | |||||
- Unremitted earnings of subsidiaries | (1,222 | ) | (856 | ) | ||||
- Government grants | (570 | ) | (570 | ) | ||||
- Other temporary differences | (166 | ) | — | |||||
Total deferred tax liabilities (b) | (1,958 | ) | (1,988 | ) | ||||
Net deferred tax assets (a + b) | 1,078 | 655 | ||||||
F-27
Table of Contents
2010 | Current | Non current | Total | |||||||||
Gross deferred tax assets | 11,930 | 62,658 | 74,538 | |||||||||
Valuation allowance | (10,705 | ) | (60,848 | ) | (71,501 | ) | ||||||
Net deferred tax assets | 1,225 | 1,811 | 3,036 | |||||||||
Deferred tax liabilities | (147 | ) | (1,811 | ) | (1,958 | ) | ||||||
Net deferred tax assets | 1,078 | — | 1,078 | |||||||||
2009 | Current | Non current | Total | |||||||||
Gross deferred tax assets | 11,860 | 65,409 | 77,269 | |||||||||
Valuation allowance | (10,643 | ) | (63,983 | ) | (74,626 | ) | ||||||
Net deferred tax assets | 1,217 | 1,426 | 2,643 | |||||||||
Deferred tax liabilities | (515 | ) | (1,473 | ) | (1,988 | ) | ||||||
Net deferred tax assets | 702 | (47 | ) | 655 | ||||||||
2011 | 3,130 | |||
2012 | 42,695 | |||
2013 | 19,951 | |||
2014 | 35,735 | |||
2015 | 6,563 | |||
Thereafter | 97,865 | |||
Total | 205,939 | |||
F-28
Table of Contents
2010 | 2009 | |||||||
Salaries and wages | 2,028 | 4,939 | ||||||
Social security contributions | 4,488 | 6,987 | ||||||
Vacation accrual | 3,393 | 3,128 | ||||||
Total | 9,909 | 15,054 | ||||||
2010 | 2009 | |||||||
2.25% long-term debt payable in annual equal instalments with final payment due May 30, 2015 | 1,437 | 1,702 | ||||||
0.25% long-term debt payable in semi-annual instalments with final payment due July 2013 | 1,497 | 1,305 | ||||||
3-month Euribor (360) plus a 1,0% spread long-term debt payable in quarterly instalments with final payment due August 2015 | 9,000 | — | ||||||
0.96% long-term debt payable in annual instalments with final payment due September 2010 | — | 74 | ||||||
0.74% long-term debt payable in annual instalments with final payment due April 2018 | 3,480 | 3,900 | ||||||
Total long-term debt | 15,414 | 6,981 | ||||||
Less current instalments | (1,831 | ) | (1,124 | ) | ||||
Long-term debt, excluding current instalments | 13,583 | 5,857 | ||||||
F-29
Table of Contents
2012 | 3,501 | |||
2013 | 3,255 | |||
2014 | 3,011 | |||
2015 | 2,486 | |||
Thereafter | 1,330 | |||
Total | 13,583 | |||
2010 | 2009 | |||||||
Provision for contingent liabilities | 15,268 | 14,952 | ||||||
One-time termination benefits | 2,046 | 2,046 | ||||||
Termination indemnities for sales agents | 1,190 | 1,211 | ||||||
Total | 18,504 | 18,209 | ||||||
F-30
Table of Contents
2010 | 2009 | |||||||
Mr. Pasquale Natuzzi | 53.5 | % | 53.5 | % | ||||
Mrs. Anna Maria Natuzzi | 2.6 | % | 2.6 | % | ||||
Mrs. Annunziata Natuzzi | 2.5 | % | 2.5 | % | ||||
Public investors | 41.4 | % | 41.4 | % | ||||
100 | % | 100 | % | |||||
2010 | 2009 | |||||||
Legal reserve | 11,199 | 11,199 | ||||||
Monetary revaluation reserve | 1,344 | 1,344 | ||||||
Government capital grants reserve | 29,749 | 29,749 | ||||||
Majority shareholder capital contribution | 488 | 488 | ||||||
Total | 42,780 | 42,780 | ||||||
F-31
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F-32
Table of Contents
2011 | 19,036 | |||
2012 | 19,154 | |||
2013 | 19,482 | |||
2014 | 19,823 | |||
2015 | 20,174 | |||
Thereafter | 37,503 | |||
Total | 135,172 | |||
F-33
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F-34
Table of Contents
2010 | 2009 | 2008 | ||||||||||
Upholstered furniture — Leather | 431,089 | 413,751 | 535,178 | |||||||||
Upholstered furniture — Fabric | 29,441 | 36,805 | 52,607 | |||||||||
Subtotal | 460,530 | 450,556 | 587,785 | |||||||||
Others | 58,104 | 64,796 | 78,241 | |||||||||
Total | 518,634 | 515,352 | 666,026 | |||||||||
F-35
Table of Contents
2010 | 2009 | 2008 | ||||||||||
Sales of upholstered furniture | ||||||||||||
United States of America | 114,113 | 103,174 | 165,445 | |||||||||
Italy | 51,694 | 53,454 | 65,739 | |||||||||
England | 33,814 | 29,701 | 31,458 | |||||||||
Canada | 40,769 | 28,076 | 37,345 | |||||||||
France | 24,121 | 27,500 | 36,311 | |||||||||
Spain | 27,305 | 27,304 | 37,383 | |||||||||
Belgium | 23,251 | 26,665 | 27,572 | |||||||||
Germany | 18,318 | 24,491 | 27,045 | |||||||||
Holland | 10,476 | 14,371 | 16,965 | |||||||||
Australia | 15,157 | 12,118 | 16,172 | |||||||||
Other countries (none greater than 2%) | 101,512 | 103,702 | 126,350 | |||||||||
Total | 460,530 | 450,556 | 587,785 | |||||||||
2010 | 2009 | |||||||
Long lived assets | ||||||||
Italy | 108,433 | 108,621 | ||||||
Romania | 22,976 | 24,577 | ||||||
China | 24,362 | 20,579 | ||||||
United States of America | 15,431 | 14,982 | ||||||
Brazil | 18,388 | 17,572 | ||||||
Other countries | 6,361 | 7,503 | ||||||
Total | 195,951 | 193,834 | ||||||
2010 | 2009 | 2008 | ||||||||||
Opening inventories | 81,565 | 92,012 | 107,290 | |||||||||
Purchases | 208,737 | 195,783 | 301,811 | |||||||||
Labor | 75,772 | 78,505 | 97,720 | |||||||||
Third party manufacturers | 12,438 | 10,627 | 18,474 | |||||||||
Other manufacturing costs | 30,344 | 34,380 | 45,487 | |||||||||
Closing inventories | (87,355 | ) | (81,565 | ) | (92,012 | ) | ||||||
Total | 321,501 | 329,742 | 478,770 | |||||||||
F-36
Table of Contents
2010 | 2009 | 2008 | ||||||||||
Interest income | 576 | 482 | 1,614 | |||||||||
Interest expense and bank commissions | (1,575 | ) | (1,624 | ) | (1,855 | ) | ||||||
Interest (expense) income, net | (999 | ) | (1,142 | ) | (241 | ) | ||||||
Gains (losses) on foreign exchange, net | 1,935 | 6,931 | (6,589 | ) | ||||||||
Unrealized exchange losses on exchange derivative instruments, net | (888 | ) | (62 | ) | (4,471 | ) | ||||||
Gains (losses) on foreign exchange, net | 1,047 | 6,869 | (11,060 | ) | ||||||||
Other, net | (4,475 | ) | (2,606 | ) | (14,517 | ) | ||||||
Total | (4,427 | ) | 3,121 | (25,818 | ) | |||||||
2010 | 2009 | 2008 | ||||||||||
Net realized losses on exchange derivative instruments | (3,057 | ) | (3,101 | ) | (1,263 | ) | ||||||
Net realized gains (losses) on accounts receivable and payable | 6,801 | 2,083 | (6,281 | ) | ||||||||
Net unrealized gains (losses) on accounts receivable and payable | (1,809 | ) | 7,949 | 955 | ||||||||
Total | 1,935 | 6,931 | (6,589 | ) | ||||||||
2010 | 2009 | 2008 | ||||||||||
Provisions for contingent liabilities | (3,812 | ) | (3,846 | ) | (3,200 | ) | ||||||
Settlement of INPS contingent liability | — | (1,080 | ) | — | ||||||||
Impairment losses of long-lived assets | — | — | (4,703 | ) | ||||||||
One-time termination benefits | — | — | (4,605 | ) | ||||||||
Write off of fixed assets | (454 | ) | (595 | ) | (1,189 | ) | ||||||
Other, net | (209 | ) | 2,915 | (820 | ) | |||||||
Total | (4,475 | ) | (2,606 | ) | (14,517 | ) | ||||||
F-37
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F-38
Table of Contents
F-39
Table of Contents
2010 | 2009 | |||||||
U.S. dollars | 33,451 | 23,418 | ||||||
Euro | 12,200 | 10,714 | ||||||
Canadian dollars | 12,081 | 1,915 | ||||||
British pounds | 8,838 | 6,652 | ||||||
Australian dollars | 7,149 | 5,164 | ||||||
Swiss francs | 1,584 | 795 | ||||||
Norwegian kroner | 1,091 | 718 | ||||||
Swedish kroner | 919 | 587 | ||||||
Danish kroner | 497 | 470 | ||||||
Japanese yen | 2,310 | 311 | ||||||
Total | 80,120 | 50,744 | ||||||
F-40
Table of Contents
2010 | 2009 | |||||||||||||||
Contract | Unrealized | Contract | Unrealized | |||||||||||||
amount | gains (losses) | amount | gains (losses) | |||||||||||||
Assets | 40,981 | 171 | 13,281 | 318 | ||||||||||||
Liabilities | 39,139 | (1,059 | ) | 37,463 | (380 | ) | ||||||||||
Total | 80,120 | (888 | ) | 50,744 | (62 | ) | ||||||||||
2010 | 2009 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
value | value | value | value | |||||||||||||
Assets: | ||||||||||||||||
- Marketable debts securities | 4 | 4 | 4 | 4 | ||||||||||||
Liabilities: | ||||||||||||||||
- Long-term debt | 15,414 | 14,149 | 6,981 | 6,214 |
F-41
Table of Contents
2010 | 2009 | 2008 | ||||||||||
Net loss attributable to Natuzzi S.p.A. and subsidiaries under Italian GAAP | (11,078 | ) | (17,686 | ) | (61,938 | ) | ||||||
Adjustments to reported income: | ||||||||||||
(a) Revaluation of property, plant and equipment | 27 | 27 | 27 | |||||||||
(b) Government grants | 640 | 610 | 811 | |||||||||
(c) Revenue recognition | (1,462 | ) | (2,652 | ) | 2,330 | |||||||
(d) Goodwill and intangible assets | 505 | 1,505 | (2,634 | ) | ||||||||
(e) Share grants and options | — | — | (2 | ) | ||||||||
(f) Translation of foreign financial statements | 2,896 | (5,193 | ) | 753 | ||||||||
(g) One-time termination benefits | — | (2,559 | ) | 4,605 | ||||||||
(h) Impairment of long-lived assets | — | (12 | ) | 400 | ||||||||
Tax effect of US GAAP adjustments | (794 | ) | 223 | (14 | ) | |||||||
Net loss in conformity with US GAAP | (9,266 | ) | (25,737 | ) | (55,662 | ) | ||||||
Basic loss per share in conformity with US GAAP | (0.17 | ) | (0.47 | ) | (1.02 | ) | ||||||
Diluted loss per share in conformity with US GAAP | (0.17 | ) | (0.47 | ) | (1.02 | ) | ||||||
F-42
Table of Contents
2010 | 2009 | |||||||
Total equity attributable to Natuzzi S.p.A. and Subsidiaries under Italian GAAP | 323,119 | 325,027 | ||||||
(a) Revaluation of property, plant and equipment | (480 | ) | (507 | ) | ||||
(b) Government grants | (10,787 | ) | (11,427 | ) | ||||
(c) Revenue recognition | (6,157 | ) | (4,695 | ) | ||||
(d) Goodwill and intangible assets | 6,731 | 6,226 | ||||||
(f) Translation of foreign financial statements | 6,933 | 13,208 | ||||||
(g) One-time termination benefits | 2,046 | 2,046 | ||||||
(h) Impairment of long-lived assets | 388 | 388 | ||||||
Tax effect of US GAAP adjustments | (3,494 | ) | (2,700 | ) | ||||
Equity attributable to Natuzzi S.p.A. and Subsidiaries in conformity with US GAAP | 318,300 | 327,566 | ||||||
Dec. 31, 2010 | Dec. 31, 2009 | |||||||
ASSETS | ||||||||
Current assets | 289,630 | 295,125 | ||||||
Non current assets | 218,868 | 225,962 | ||||||
Total assets | 508,498 | 521,087 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities | 108,261 | 118,354 | ||||||
Long-term liabilities | 79,825 | 73,307 | ||||||
Equity attributable to Natuzzi S.p.A. and Subsidiaries | 318,300 | 327,566 | ||||||
Non-controlling interest | 2,112 | 1,860 | ||||||
Total Liabilities and Shareholder’s’ Equity | 508,498 | 521,087 | ||||||
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December 31, 2010, 2009 and 2008
2010 | 2009 | 2008 | ||||||||||
Net sales | 510,755 | 506,026 | 670,130 | |||||||||
Cost of sales | (321,892 | ) | (333,667 | ) | (496,905 | ) | ||||||
Gross profit | 188,863 | 172,359 | 173,225 | |||||||||
Selling expenses | (146,035 | ) | (140,021 | ) | (163,265 | ) | ||||||
General and administrative expenses | (42,468 | ) | (46,585 | ) | (49,916 | ) | ||||||
Operating income/(loss) | 360 | (14,247 | ) | (39,956 | ) | |||||||
Other income/(expenses), net | (2,175 | ) | (1,248 | ) | (14,313 | ) | ||||||
Earning/(loss) before taxes and non-controlling interest | (1,815 | ) | (15,495 | ) | (54,269 | ) | ||||||
Income taxes | (7,354 | ) | (9,808 | ) | (1,825 | ) | ||||||
Net income/(loss) | (9,169 | ) | (25,303 | ) | (56,094 | ) | ||||||
Net (income)/loss attributable to the non-controlling interest | (97 | ) | (434 | ) | 432 | |||||||
Net income/(loss) attributable to Natuzzi S.p.A. and Subsidiaries | (9,266 | ) | (25,737 | ) | (55,662 | ) | ||||||
2010 | 2009 | 2008 | ||||||||||
Net sales Italian GAAP | 518,634 | 515,352 | 666,026 | |||||||||
(b) Government grants (reclassification) | (748 | ) | (953 | ) | (990 | ) | ||||||
(c) Revenue recognition (adjustment) | (4,893 | ) | (5,144 | ) | 9,430 | |||||||
(j) Cost paid to resellers (reclassification) | (2,238 | ) | (3,229 | ) | (4,336 | ) | ||||||
Net sales US GAAP | 510,755 | 506,026 | 670,130 | |||||||||
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2010 | 2009 | 2008 | ||||||||||
Operating income (loss) Italian GAAP | 398 | (10,571 | ) | (34,996 | ) | |||||||
(a) Revaluation property, plant and equipment (adjustment) | 27 | 27 | 27 | |||||||||
(b) Government grants (adjustment) | 640 | 610 | 811 | |||||||||
(c) Revenue recognition (adjustment) | (1,462 | ) | (2,652 | ) | 2,330 | |||||||
(d) Goodwill and intangible assets (adjustment) | 1,211 | 1,505 | (2,634 | ) | ||||||||
(e) Share grants and options (adjustment) | — | — | (2 | ) | ||||||||
(g) One-time termination benefits | — | (2,559 | ) | — | ||||||||
(h) Impairment of long-lived assets (reclassification) | — | — | (4,703 | ) | ||||||||
(h) Impairment of long-lived assets (adjustment) | — | (12 | ) | 400 | ||||||||
(i) Write-off of tangible assets (reclassification) | (454 | ) | (595 | ) | (1,189 | ) | ||||||
Operating income (loss) US GAAP | 360 | (14,247 | ) | (39,956 | ) | |||||||
F-45
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2010 | 2009 | |||||||
Effects | Effects | |||||||
Increase | Increase | |||||||
Consolidated balance sheets | (Decrease) | (Decrease) | ||||||
Trade receivables, net | (23,500 | ) | (18,607 | ) | ||||
Inventories | 14,570 | 11,818 | ||||||
Total effect on current assets (a) | (8,930 | ) | (6,789 | ) | ||||
Accounts payable-trade | (2,773 | ) | (2,094 | ) | ||||
Income taxes | — | (413 | ) | |||||
Total effect on current liabilities (b) | (2,773 | ) | (2,507 | ) | ||||
Total effect on shareholders’ equity (a-b) | (6,157 | ) | (4,282 | ) | ||||
Consolidated statements of operations | 2010 | 2009 | 2008 | |||||||||
Net sales | (4,893 | ) | (5,144 | ) | 9,430 | |||||||
Gross profit | (2,141 | ) | (2,991 | ) | 3,149 | |||||||
Operating income (loss) | (1,462 | ) | (2,652 | ) | 2,330 | |||||||
Net Income | (1,875 | ) | (2,707 | ) | 2,709 | |||||||
F-46
Table of Contents
Goodwill | Intangibles | Deferred taxes | ||||||||||||||||||||||
US | Italian | US | Italian | US | Italian | |||||||||||||||||||
Balance at December 31, 2007 | 7,760 | 6,686 | 6,281 | — | (2,077 | ) | (921 | ) | ||||||||||||||||
Impairment of goodwill | (1,500 | ) | — | — | — | — | — | |||||||||||||||||
Write off of goodwill | — | (776 | ) | — | — | — | — | |||||||||||||||||
Impairment of an intangible asset | — | — | (3,583 | ) | — | 1,218 | — | |||||||||||||||||
Amortization | — | (2,507 | ) | (834 | ) | — | 274 | (486 | ) | |||||||||||||||
Balance at December 31, 2008 | 6,260 | 3,403 | 1,864 | — | (585 | ) | (1,407 | ) | ||||||||||||||||
Acquisition of stores | 651 | 651 | — | — | — | — | ||||||||||||||||||
Amortization | — | (1,827 | ) | (322 | ) | — | 100 | (526 | ) | |||||||||||||||
Balance at December 31, 2009 | 6,911 | 2,227 | 1,542 | — | (485 | ) | (1,933 | ) | ||||||||||||||||
Impairment of goodwill | (706 | ) | — | — | — | — | — | |||||||||||||||||
Amortization | — | (1,516 | ) | (305 | ) | — | 105 | (476 | ) | |||||||||||||||
Balance at December 31, 2010 | 6,205 | 711 | 1,237 | — | (380 | ) | (2,409 | ) | ||||||||||||||||
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F-48
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F-49
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F-50
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F-51
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F-52
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F-53
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2010 | 2009 | |||||||
Balance, beginning of the year | 1,944 | 1,715 | ||||||
Additions based on tax positions related to the current year | — | — | ||||||
Additions for tax positions of prior years | 87 | 351 | ||||||
Reductions due to statute of limitations expiration | (479 | ) | (122 | ) | ||||
Settlements | — | — | ||||||
Balance, end of year | 1,552 | 1,944 | ||||||
F-54
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US GAAP | IT GAAP | Difference | ||||||||||
Balance at January 1, 2010 | 1,944 | 1,944 | — | |||||||||
Additions based on tax positions related to the current year | — | — | — | |||||||||
Additions for tax positions of prior years | 87 | 87 | — | |||||||||
Reductions due to statute of limitations expiration | (479 | ) | (479 | ) | — | |||||||
Settlements | — | — | — | |||||||||
Balance at December 31, 2010 | 1,552 | 1,552 | — | |||||||||
US GAAP | IT GAAP | Difference | ||||||||||
Balance at January 1, 2009 | 1,715 | 1,715 | — | |||||||||
Additions based on tax positions related to the current year | — | — | — | |||||||||
Additions for tax positions of prior years | 351 | 351 | — | |||||||||
Reductions due to statute of limitations expiration | (122 | ) | (122 | ) | — | |||||||
Settlements | — | — | — | |||||||||
Balance at December 31, 2009 | 1,944 | 1,944 | — | |||||||||
US GAAP | IT GAAP | Difference | ||||||||||
Balance at January 1, 2008 | 1,460 | 1,460 | — | |||||||||
Additions based on tax positions related to the current year | 2 | 2 | — | |||||||||
Additions for tax positions of prior years | 483 | 483 | — | |||||||||
Reductions due to statute of limitations expiration | (230 | ) | (230 | ) | — | |||||||
Settlements | — | — | — | |||||||||
Balance at December 31, 2008 | 1,715 | 1,715 | — | |||||||||
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F-56
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F-57
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F-58
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NATUZZI S.p.A. | ||||||
By | /s/ Pasquale Natuzzi | |||||
Title: Chief Executive Officer |
Table of Contents
1.1 | English translation of the by-laws (Statuto) of the Company, as amended and restated as of January 24, 2008 (incorporated by reference to the Form 20-F filed by Natuzzi S.p.A. with the Securities and Exchange Commission on June 30, 2008, file number 1-11854). | |||
2.1 | Deposit Agreement dated as of May 15, 1993, as amended and restated as of December 31, 2001, among the Company, The Bank of New York, as Depositary, and owners and beneficial owners of ADRs (incorporated by reference to the Form 20-F filed by Natuzzi S.p.A. with the Securities and Exchange Commission on July 1, 2002, file number 1-11854). | |||
8.1 | List of Significant Subsidiaries. | |||
12.1 | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
12.2 | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
13.1 | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |