CONSOLIDATED FINANCIAL STATEMENTS

45 C ONSOLIDATED H IGHLIGHTS

EUR millions 1997 1998 1999 2000 2001

Net Sales 7,513 7,130 8,758 11,867 12,567 Income from operations* 1,275 1,181 1,551 1,967 1,548 Income before taxes* 1,179 969 1,415 1,652 597 Net current income before goodwill amortization, Group share 300 184 295 320 75 Net income, Group share 246 47 264 251 (95)

* Adjusted retroactively to reflect reclassifications.

euros

Net current income per share before goodwill amortization * 1.78 1.04 1.63 1.77 0.41

* Adjusted to reflect the 4 for 1 stock split of July 3, 2000.

EUR millions

Balance sheet total 20,091 21,422 26,330 28,435 29,228

Shareholders’ equity 3,595 3,724 3,887 3,972 3,788

Net cash provided by operating activities* 1,155 517 922 1,140 884

* Adjusted retroactively to reflect reclassifications.

47 C ONSOLIDATED B ALANCE S HEET AT D ECEMBER 31 in EUR millions

2001 2000 1999 ASSETS Notes Euros Euros Euros

Current assets Cash and cash equivalents 3 834 730 664 Short-term investments 3 623 1,326 187 Treasury shares 4 1,143 1,370 903 Trade accounts receivable 5 1,577 1,676 1,476 Net deferred taxes 23 503 269 275 Inventories and work in progress 6-29 3,727 3,431 2,988 Other short-term receivables 7 1,534 1,616 1,912

Total current assets 9,941 10,418 8,405

Fixed assets Financial assets Investments in companies accounted for by the equity method 8 81 24 14 Other investments securities 9 1,705 2,051 4,217 Other financial assets 478 413 261 2,264 2,488 4,492 Property, plant and equipment 10 7,120 5,802 4,956 Amortizations (2,489) (2,045) (1,727) 4,631 3,757 3,229

Goodwill 11 4,406 4,099 3,297 Amortizations (1,115) (505) (372) 3,291 3,594 2,925

Brands and other intangible assets 12 9,392 8,364 7,409 Depreciations and amortizations (291) (186) (130) 9,101 8,178 7,279

Total fixed assets 19,287 18,017 17,925

Total assets 29-30 29,228 28,435 26,330

48 2001 2001 2000 1999 after before after after assignment assignment assignment assignment LIABILITIES Notes Euros Euros Euros Euros

Short term liabilities Current financial debt 13 340 340 331 436 Short-term financial borrowings 14 4,447 4,447 5,818 5,255 Bank overdrafts 14 603 603 619 396

5,390 5,390 6,768 6,087

Trade accounts payable 1,450 1,450 1,341 1,116 Other short-term liabilities 15 2,763 2,674 2,856 2,849

4,213 4,124 4,197 3,965

Total short-term liabilities 9,603 9,514 10,965 10,052

Long-term deferred taxes 23 171 171 114 171

Medium and long-term liabilities Repackaged notes 16 284 284 346 406 Financial debt, less current portion 13 5,402 5,402 3,499 3,085 Other medium and long-term liabilities and provisions 17 1,322 1,322 1,165 922

Total medium and long-term liabilities 7,008 7,008 5,010 4,413

Minority interests 18 8,658 8,658 8,374 7,807

Shareholders’ equity Capital 363 363 363 359 Consolidated reserves 3,493 3,728 3,673 3,586 Cumulative translation adjustment (68) (68) (64) (58) Income for the period – (95) –– Interim dividend paid – (51) ––

Total shareholders’ equity 18 3,788 3,877 3,972 3,887

Total liabilities 29,228 29,228 28,435 26,330

The notes are fully part of the consolidated financial statements.

49 C ONSOLIDATED S TATEMENT OF I NCOME in EUR millions except for earnings per share expressed in euros

2001 2000 1999 Notes Euros Euros Euros

Net sales 22-29-30 12,567 11,867 8,758 Cost of sales (4,764) (4,313) (3,200)

Gross margin 7,803 7,554 5,558

Design expenses 20 (25) (55) (76) Marketing and selling expenses (4,743) (4,305) (2,999) General and dministrative expenses (1,487) (1,227) (932)

Income from operations 29-30 1,548 1,967 1,551

Financial income 22 (499) (467) (254) Dividends from unconsolidated investments 16 45 97 Other income and expenses - net (468) 107 21

Income before income taxes 597 1,652 1,415

Income taxes 23 (194) (635) (555) Income from companies accounted for under the equity method 8 (42) (34) (6) Net income before amortization of goodwill and unusual items 361 983 854 (group share: 2001: 75; 2000: 320; 1999: 295)

Amortization of goodwill 24 (159) (131) (93) Net income before unusual items 202 852 761 (group share: 2001: 5; 2000: 262; 1999: 254)

Unusual items 25 (199) 35 41

Net income 3 887 802

Minority interests (98) (636) (538)

Net income, group share (95) 251 264

Net income per share before amortization of goodwill and unusual items 0.41 1.77 1.63 Number of shares used as basis for calculation* 181,721,048 181,261,048 180,676,580

Fully diluted earnings per share before amortization of goodwill and unusual items 0.41 1.76 1.63 Number of shares used as basis for calculation* 181,723,825 181,665,063 181,465,508

* Number adjusted to reflect the four for one stock split of July 3, 2000.

The notes are an integral part of the consolidated financial statements.

50 C ONSOLIDATED S TATEMENT OF C ASH F LOW EUR millions 2001 2000 1999 Euros Euros Euros

I - OPERATING ACTIVITIES Net income, group share (95) 251 264 Minority interests in net income 98 636 538 Elimination of income from companies accounted for by the equity method 42 34 7 Dividends received from equity companies 4 21 Amortization and net long-term and short-term provisions 1,672 292 439 Net gain (loss) on sale of fixed assets or treasury shares (837) (75) (338) Net cash provided by operating activities before changes in current assets and liabilities 884 1,140 911 Change in current assets (403) (697) (654) Change in short-term debts 47 384 379 Change in working capital requirements (356) (313) (275) Net cash provided by operating activities ➀ 528 827 636

II - INVESTMENT ACTIVITIES Purchases of brands and other intangible assets (135) (75) (76) Purchases of plant, property and equipment (949) (822) (524) Acquisition of equity investments (417) (447) (1 709) Changes in debt on purchases of fixed asset 244 56 (6) Sale of non-financial fixed assets 149 85 142 Change in receivables on disposals of fixed assets 0 1 16 Impact of reclassification of equity interests and investment securities (677) 817 0 Disposal of unconsolidated investments 2,122 1,195 1,560 Changes in other financial assets (181) (192) (47) Impact in changes in consolidation (895) (547) (1,215) Net cash provided by (used in) investing activities ➁ (739) 71 (1,859)

III - FINANCING ACTIVITIES Proceeds from issuance of common stock 42 11 60 Issuance of bonds and other financial debt 2,300 3,077 4,798 Principal repayments on short-term borrowings and long-term debt (2,477) (2,616) (1,197) Change in current accounts 304 370 (975) Changes in listed securities 880 (1,071) 112 Net cash provided by (used in) financing activities ➂ 1,049 (229) 2,798

IV - ACQUISITION AND DISPOSAL OF LVMH / SHARES ➃ (33) (370) (730)

V - DIVIDENDS PAID IN THE PERIOD ➄ (508) (384) (454)

VI - IMPACT OF EXCHANGE RATE DIFFERENCES ➅ (12) (9) (97) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ➀ + ➁ + ➂ + ➃ + ➄ + ➅ 285 (94) 294

Cash and cash equivalents at beginning of year (net of bank overdrafts) 326 420 126 Cash and cash equivalents at year end (net of bank overdrafts) 611 326 420 NET INCREASE (DECREASE ) IN CASH AND CASH EQUIVALENTS 285 (94) 294

The statement of cash flows shows the change in cash (net of bank overdrafts) and cash equivalents consisting of short-term investments that can be readily converted into cash, excluding, since January 1, 2001, listed securities. Figures from previous periods have been adjusted to allow comparisons with the data presented.

51 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SIGNIFICANT EVENTS AND CHANGES IN THE GROUP CONSOLIDATION

In 2001

Wines and Spirits • In 2000, the Group acquired 60 and 90% respectively of the Newton (Nappa Valley, ) and MountAdam (Eden Valley, southern ) winegrowing estates for EUR 34.5 million. These interests were fully consolidated over the full year in 2001.

Fashion and Leather Goods • In January 2001, pursuant to an agreement signed in December 2000, LVMH acquired all of the stock of American company Gabrielle Studio, owner of the Donna Karan New York brand, for USD 405 million. Moreover, in March 2001, LVMH drafted a merger project with Donna Karan International Inc (DKI), a company listed on the New York stock exchange and owner of the exclusive license for the Donna Karan brand, proposing the transfer of LVMH’s interest in Gabrielle Studio to DKI and a takeover bid by LVMH for practically all of DKI’s stock at the price of USD 10.75 per share, a total of USD 185 million. This project was approved by DKI’s Shareholders’ Meeting of November 27, 2001. Following this operation, LVMH holds 100 % of the preferred stock and 89.40 % of the common stock of the new Donna Karan group. Gabrielle Studio was fully consolidated for the entire fiscal year while the stake in Donna Karan International will be consolidated as of 2002. The USD 405 million investment in Gabrielle Studio was fully allocated to the value of the Donna Karan New York brand. • In December 2001, LVMH’s 25.50 % interest in was increased to 51 %, with LVMH’s buyout of Prada’s stake in the 50/50 joint venture created for that investment (see below: Changes in Consolidation in 2000). This operation represents an additional investment of EUR 295 million, 255 million of which will be paid over a 4-year period. Most of this amount, i.e. EUR 404 million (EUR 206 million attributable to the Group) was allocated to the value of the Fendi brand; EUR 136 million was recorded as goodwill to be amortized over 30 years. The Fendi investment has been consolidated on a proportionate basis since July 2000; at December 31, 2001, Fendi’s balance sheet was fully consolidated.

Perfumes and Cosmetics • The Group’s 65% interest in American cosmetics company Fresh, acquired in September 2000 for EUR 18 million, has been fully consolidated since January 1, 2001.

52 Selective Retailing In January 2001, LVMH acquired 55% of the department store for EUR 256 million, including EUR 88 million through a reserved capital increase. The amount invested corresponds to real estate which is not limited to the buildings housing the department store, estimated at EUR 471 million (EUR 182 million for the group share, after deferred tax). The goodwill on this investment, including brand value, is EUR 57 million, to be amortized over 20 years. La Samaritaine has been fully consolidated since January 1, 2001.

Watches and Jewelry In January 2001, LVMH and the De Beers group signed an agreement to form a 50/50 joint venture. This agreement was approved by the European Commission in July. Starting in 2002, this company will have an exclusive license for the world-wide sale of diamond jewelry in a network of stores to be created under the “De Beers” name. Since July 2001, this joint venture has been accounted for using the equity method.

Other Activities In January 2001, Mrs. Daniella Luxembourg and Mr. Simon de Pury, the founders of the Geneva art gallery de Pury et Luxembourg Art, transferred their full interest in de Pury et Luxembourg Art to Phillips. This contribution was remunerated with a 25% interest in Phillips, and a payment of USD 10 million. Following this operation, Phillips became Phillips, de Pury & Luxembourg (PPL). In November 2001, within the framework of an agreement drawn up in July, PPL’s UK activities and the operations of British auction company Bonhams & Brooks merged within a joint entity 49.9 % held by PPL, with PPL retaining control of its international activities. The transfer of de Pury & Luxembourg Art to Phillips resulted in goodwill of EUR 54 million, added to the initial goodwill of EUR 95 million. De Pury & Luxembourg Art has been fully consolidated in Phillips since January 1, 2001; as of November 2001, the stake in the joint venture with Bonhams & Brooks has been accounted for using the equity method. In December 2001, the group’s 50 % stake in the luxury product Internet site eLuxury was increased to 99.99 %, through subscription to a capital increase. This operation resulted in goodwill of EUR 45 million, corresponding to the value of the customer base and prior site development costs. This interest was accounted for by the equity method over 2001; it was fully consolidated on December 31, 2001. In January 2001, the sub-group Télématique Victoire Multimédia was transferred to the Jet Multimédia group in exchange for 479,125 shares in Jet Multimédia with a guaranteed price. This disposal resulted in a gross capital gain of EUR 25 million.

* * *

Investments in Pucci and Rossimoda (Fashion and Leather Goods group), in (Perfumes and Cosmetics group) and Etude Tajan (Other Activities), representing a total of EUR 98 million, will be consolidated in 2002, either because of acquisition date or for administrative reasons.

53 In 2000:

Fashion and Leather Goods In July 2000, pursuant to the memorandum of agreement signed at the end of 1999, LVMH acquired with the Prada Group 51% of Italian group Fendi. EUR 404 million of the total EUR 564 million paid by the joint venture represents the value of the Fendi brand, and EUR 92 million was posted to goodwill. Fendi has been consolidated using the proportionate method since July 1 for 51%, including 25.50% for LVMH’s share.

Perfumes and Cosmetics In 1999, LVMH acquired 70% of the US company for EUR 67 million, the value of the BeneFit brand representing most of the price paid. Other acquisitions in 1999 include 73% of the French company , and 94% of the US cosmetics company Hard Candy; in 2000, LVMH acquired 100% of Urban Decay: these three investments represent a total of EUR 42 million, and were fully consolidated over the year.

Watches and Jewelry In addition to the investment in TAG Heuer, LVMH acquired the entire capital stock of the watch companies Ebel and at the end of 1999, for EUR 19 and 75 million respectively, as well as 100% of , the famous Paris jeweler, for EUR 47 million. The values attributed to these brands were EUR 125 million for Ebel, 58 million for Zenith, and 33 million for Chaumet. These investments are consolidated as of January 1.

Selective Retailing In addition to the Italian “Laguna” brand acquired by at the end of 1999, the business group acquired the owner of the Italian “Boidi” brand in February 2000 and purchased 100% and 50% respectively of the Italian and Greek owners of the “Carmen” and “Beauty Shop” brands in July. The total investment of EUR 154 million has been principally allocated to the value of the four brands. The corresponding goodwill is amortized over 10-15 years. The stakes in Laguna and Boidi were consolidated over the full year, while the stakes in Carmen and Marinopoulos (owner of the Beauty Shop brand) was consolidated as of July 2000. In January 2000, LVMH acquired Miami Cruiseline, an American company that sells luxury goods aboard cruise ships. The investment cost of EUR 361 million resulted in the recording of goodwill of EUR 359 million, amortized over 20 years. The investment is consolidated for the full year.

Other activities At year end 1999, LVMH acquired the Phillips auction sale house for EUR 90 million. The corresponding goodwill of EUR 95 million is amortized over 30 years. Phillips has been consolidated from January 1.

54 In 1999:

Wines and Spirits • In January, LVMH acquired the Krug champagne house for EUR 153 million; the difference between this price and the book net assets was allocated to the value of the Krug brand for EUR 100 million. Krug is consolidated as of January 1. • The stake in Château d’Yquem was increased to 64% in April, and consolidated as of July 1. The difference between the price of EUR 98 million paid, and the net book value was allocated to the Yquem brand and the revaluation of the vineyards, for EUR 108 and 18 million respectively (EUR 70 and 11 million respectively for the Group’s share).

Fashion and Leather Goods • In March 1999, the Group bought the minority interests in the Southeast Asian subsidiaries of Malletier and for USD 182 million. The corresponding goodwill, representing an additional share for the group in the unbooked value of the Louis Vuitton trademark, is amortized over 40 years. • In September, LVMH acquired 70% of the British company , for GBP 42 million; EUR 50 million of this amount was allocated to the Thomas Pink brand, EUR 35 million for the Group share, and EUR 19 million for residual goodwill, to be amortized over 20 years. Thomas Pink has been consolidated in the Selective Retailing business group since October 1 and was transferred in 2000 to the Fashion and Leather Goods business group.

Perfumes and Cosmetics • Also in January, the stake in Compagnie Financière Laflachère was increased to 52%; after the tender offer of February 1999, and the squeeze-out offer in December. Laflachère owns over 99% of the group La Brosse et Dupont, previously listed on the Paris stock exchange. The total investment was EUR 90 million, EUR 62 million of which was recorded under goodwill, representing the La Brosse et Dupont retail “know-how”; the goodwill is amortized over 25 years. This activity has been consolidated in the Perfumes and Cosmetics business group since January 1.

Watches and Jewelry • In September 1999, as part of the creation of a Watches and Jewelry business group, LVMH acquired on the Zurich stock exchange, more than 98% of the TAG Heuer group through a takeover bid. The CHF 1,151 million price for this acquisition primarily represents the value of the TAG Heuer brand. TAG Heuer was consolidated as of October 1 in Other Activities, as the Watches and Jewelry business group was not formed until 2000, and was transferred as of January 1, 2000.

* * * The other investments made and consolidated in the period included 70% of the US company Bliss, 100% of the Swiss company Benedom, Radio Classique and Sid Editions, representing a total of EUR 97 million. Finally, in 1999 the investments of the Champagne and Wine business group in the Simi Winery (California) and Porto Rozès (Portugal), and those of the Cognac and Spirits business group in Etablissements Pellisson were sold. These disposals resulted in a total capital gain of EUR 29 million.

55 Pro forma data and impact on cash flow: A simplified pro forma statement of income is presented below for 2000 and 2001, on a constant consolidation basis taking into account, as of January 1, 2000, the changes that occurred in 2001 or over less than 12 months in 2000: • in 2001: the consolidation of Newton Vineyards, MountAdam, Gabrielle Studio, the additional investment in Fendi, Fresh, de Pury & Luxembourg Art and La Samaritaine. • in 2000: the consolidation of the initial investment in Fendi, as well as Homme (Ecce), Carmen and Marinopoulos (Beauty Shop). This pro forma data does not necessarily represent the results that would have effectively been recorded in the consolidated statements if the operations described had taken place on the date stated. Moreover, they cannot be used to forecast future trends in consolidated results. 2001 2000 EUR millions pro forma pro forma Net Sales 12,567 12,241 - Christian Dior Couture 350 299 - Wines and Spirits 2,232 2,346 - Fashion and Leather Goods 3,612 3,342 - Perfumes and Cosmetics 2,231 2,083 - Watches and Jewelry 548 617 - Selective Retailing 3,475 3,494 Income from operations 1,548 1,989 Income before income taxes 595 1,617 Net current income before amortization of goodwill, group share 75 292 Net income before unusual items, group share 5 234

The effect of changes in consolidation for fiscal year 2001 on the balance sheet at December 31, 2001 is as follows: EUR millions

Brands and other intangible assets 894 Minority interests 323 Goodwill 272 Net financial debt 1,241 Net tangible assets 519 Other debts at more than one year 228 Net inventories 80 Other debts at less than one year 173 Net trade receivables 39 Other assets 161 1,965 1,965

The impact of the changes in consolidation on its cash flow, net of the cash flow of the companies purchased or sold and net of deferred payments on these acquisitions, amounts to EUR 628 million (EUR 547 million in 2000). This figure represents primarily the investments in Gabrielle Studio (EUR 436 million), la Samaritaine (EUR 112 million) and de Pury Luxembourg Art SA (EUR 56 million). In 2000, they mainly concerned the investments in Fendi and Miami Cruiseline.

56 NOTE 2 - ACCOUNTING PRINCIPLES - RULES - METHODS The consolidated financial statements of Christian Dior Group have been prepared in accordance with French accounting principles as defined by the French law of January 3, 1985. The new French regulation 99-02 from the Comité de Réglementation Comptable, published on June 22, 1999; effective as of fiscal year 2000, had no material impact on shareholders’ equity and Group earnings. The primary accounting principles used to prepare these accounts are described below.

2.1 - Principles of consolidation The accounts of companies in which Christian Dior has direct or indirect control are fully consolidated. The accounts of companies in which Christian Dior has joint control are consolidated using the proportionate method. For the companies owned jointly with Diageo Group, only the portion of assets and liabilities and results of operations relating to LVMH activity is included in the accompanying financial statements. Investments in companies in which Christian Dior has a direct or indirect significant influence but no controlling interest are accounted for using the equity method. The list of companies included in the scope of consolidation is presented in note 31.

2.2 Foreign currency translation, hedging of exchange and interest rate risks a - Currency translation. The accounts of foreign companies are converted as follows: • at the exchange rate at year end for balance sheet items; • at the average rates of the financial year for statement of income items. Translation adjustments arising from the application of these rates have been recorded in shareholders’ equity, under “Foreign currency translation”. b - Currency transactions Foreign currency transactions by consolidated companies are converted at the exchange on the transaction date. Losses and gains resulting from the conversion of balances at the December 31 rate are recorded in the statement of income. Exchange differences from currency debt, assigned to cover long-term investments in the same currency, are recorded as “Currency translation”. c - Currency and option contracts Forward currency contracts and options are revalued using the December 31 exchange rates. Unrealized gains and losses resulting from such revaluations are: • recorded in the statement of income to offset the unrealized gains or losses on the assets or liabilities covered by these instruments; • deferred if the instruments have been allocated to transactions planned for the following accounting period; • recorded as income or losses for the period if they have not been allocated. Deferred unrealized gains and losses are included in “Other current assets” and “Other liabilities”.

57 d - Hedging Currency gains and losses arising from hedges on an underlying commercial asset are recorded as operating income or expenses, except for premiums and discounts of forward contracts, which are recorded on a prorated basis as financial income or expenses. Foreign exchange instruments for hedging financial risks are recorded as financial income or expenses. e - Interest rate hedging Gains and losses from interest rate hedging contracts (swap contracts, CAP, forward rate agreements, collars, etc.) are accounted for on a prorated basis over the period of the related contracts. If the interest rate “swaps” mature after the maturity of the operations hedged, the unrealized losses at year end are, where applicable, recorded in the income statement; the unrealized gains are not recorded.

2.3 - Brands and other intangible assets Intangible assets are recorded as assets at their purchase price plus difference of valuation, if any. The Group capitalizes in its balance sheet statements under their own names, only those brands that are well known, individually identifiable and whose value development over time can be measured. Expenses incurred to create a new brand or develop an existing one have been recorded under expenses. The method applied is specific to each business segment and may correspond to the capitalization of net or marginal income (after income tax), or to a sales coefficient, or a combination of the two methods. These multiplier or capitalization coefficients are calculated on the basis of the following factors: • age of the brand; • evaluation of the brand’s durability; • brand recognition; • references to previous transactions. They are not amortized. A provision for depreciation is recorded when the rule reveals on one of the factors that a brand’s value has been permanently impaired. Other intangible assets are amortized over their estimated useful lives: • leasehold acquisition rights duration of lease • software 1 to 5 years

2.4 - Goodwill and related intangible assets Goodwill is defined as the difference between the purchase price of the securities of consolidated companies, and the Group share in their net assets at the date of acquisition. This calculation is made after the net assets of the acquired company have been restated in conformity with the Group accounting principles and after revaluation to fair value, when fair value differs from net book value at the purchase date. In the selective retailing activity or in other group operations such as the media, the value of intangible assets such as brands, market share or business (fonds de commerce), are not reported separately from goodwill.

58 Goodwill is recorded depending on whether it is positive or negative under “Goodwill” on the assets side or under “Contingencies” on the liabilities side. As of the changes in group consolidation in fiscal 2000, goodwill is reported in the operating currency of the acquired company. It was previously reported in euros. Positive goodwill is amortized over periods ranging from 5 to 40 years. An exceptional amortization may be recorded if the expected cash flows are significantly less than the estimate made at the time of the acquisition. Goodwill from businesses acquired under French regulation (“fonds de commerce”) is amortized over a period which may not exceed 18 years.

2.5 - Tangible assets Tangible assets are recorded in the consolidated balance sheets at their acquisition cost. They include goodwill, if any. Assets acquired under financial lease contracts are recorded as fixed assets and the resulting financial debt is recorded as liabilities. Tangible assets are depreciated primarily according to the straight line method at rates based on the estimated useful lives below: • Buildings 20 to 50 years • Plant and equipment 3 to 20 years • Retail leasehold improvements 3 to 10 years • Vineyards 18 to 25 years • Other intangible assets 3 to 10 years Vineyards preparation and development costs are capitalized until the vineyards become commercially productive (generally the first three years) and are included in “tangible assets in progress”.

2.6 - Financial assets Unconsolidated investments are recorded at acquisition cost. In case of a difference considered to be permanent between the useful value of such an investment for the Group and the book value, a provision for depreciation is recorded for this amount. The useful value of investments is measured according to such criteria as the value of the group’s share in the net asset, the stock price or earnings and cash flow prospects; these criteria are weighted for the effects of holding these investments for the group in terms of strategy, or synergies with existing businesses.

2.7 - Inventories and work in progress Inventories are recorded at the lower of cost or market value. Cost price is determined either using the weighted average cost method or the FIFO (first-in, first-out) method. Given the aging process for champagne and cognac, their inventories are often held for more than one year. However, in line with industry practices, these are classified as current assets. Financial fees are not taken into account for the evaluation of inventories.

2.8 - Trade accounts receivable and other receivables Receivables are recorded at their face value. An allowance for depreciation is recorded where the inventory value, based on the probability of recovery, is less than the recorded value.

59 2.9 - Treasury shares Treasury shares are recorded at acquisition cost. Shares held under French market regulations for stock price adjustment or for employee stock option plans, as well as shares held by subsidiaries on a short-term basis are recorded as assets in the balance sheet. The shares held on a long-term basis, or for the purpose of future cancellation or exchange are considered as fixed assets and deducted from shareholders’ equity, including the realized capital gains or losses. Until fiscal year 1999, only LVMH shares held by subsidiaries, in accordance with applicable regulation, were deducted from shareholders’ equity. The other shares are treated as short-term investment securities.

2.10 - Short-term investment Short-term investments and equivalent receivables (investment fund units, money-market funds, etc.) are stated at the acquisition cost. A depreciation allowance is recorded where the acquisition value is higher than the market value. Market value for traded securities is determined by reference to the average price quoted on the related stock exchange during the last month of the year, and if applicable, translated at the year-end exchange rate. Market value of non-traded securities is based on published values or estimated realizable value. In case of partial sale of an investment, the FIFO or weighted average price method is used to determine the gain or loss to be recognized.

2.11 - Cash and cash equivalents Cash and cash equivalents include cash in banks and short-term deposits which are immediately available, minus restricted cash.

2.12 - Bond issues Bond issue costs and redemption premiums on convertible bonds are recorded as financial costs over the life of the bond. Provisions for redemption premiums are funded annually and recorded under “Financial debt”. Issue premiums on bonds issued above par are deducted from issuance costs. The issuance costs of subordinated securities are amortized over 15 years.

2.13 - Design costs - Research and development costs These costs are generally recorded as expenses in the fiscal year in which they are incurred.

2.14 - Income taxes; deferred taxes Deferred income taxes arise out of timing differences between the net book assets of consolidated companies as reported in the consolidation and the amount resulting from the application of tax rules. These amounts are recorded under the liability method, based on the known tax conditions at the end of the year. Tax savings from carried-over fiscal deficits are only recorded as deferred tax debits when their recovery is deemed probable. Taxes that would become payable in the event of distribution of retained earnings of subsidiaries are provisioned for if such a distribution is probable.

60 2.15 - Other income and charge; unusual items The Group’s primary business is the management and development of its brands and stores. Income from operations is derived from these activities, for recurring and non recurring operations, main or incidental. Other income and expenses reflects statement of income items which, due to their nature or frequency, may not be considered as inherent to the group’s operating activity. Other income and charges in a material amount and of an exceptional nature are recorded as unusual items. Income before taxes is equivalent to the notion of “Net income of consolidated companies”. Net income is income net of taxes, excluding goodwill depreciation expense and before unusual items.

2.16 - Earnings per share Earnings per share are calculated based on the weighted average number of common shares outstanding during the year. Fully diluted earnings per share are computed as described above, plus the weighted average number of shares resulting from the assumed exercise of all existing options. This calculation takes into effect the corresponding reduction in interest expense and tax effect.

2.17 - Pension and early retirement plans In some countries including , salary-based contributions are paid under these plans to government organizations which are liable for the payment of benefits. The Group has no actuarial liability under such plans. Where specific retirement plans or other commitments are the responsibility of the Group, the corresponding actuarial commitments are charged to the statement of income either by way of a provision for “Other long-term liabilities” or as payments to independent organizations responsible for the payment of the benefits.

2.18 - Sales repurchase commitments Companies in the Fragrances and Cosmetics division repurchase unsold or outdated products from their customers or distributors. Reserves are funded on the basis of a percentage of sales and gross margin to cover the costs of such repurchased products.

61 NOTE 3 - CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

A - Cash and cash equivalents EUR millions 2001 2000 1999

Fixed-term deposits (maturity > 3 months) 9 12 19 Fixed-term deposits (maturity < 3 months) 73 132 107 Ordinary bank accounts 752 586 538 Total 834 730 664 Inc. restricted accounts 5 13 4

At December 31, 2000, listed securities included 12,500,000 shares in Diageo Plc (UK), and 18,465,940 in Bouygues SA (France) for EUR 126 and 956 million respectively. The Diageo shares were sold in 2001 and the Bouygues shares were reclassified as other long-term investments (see Note 9).

B - Short-term investments EUR millions 2001 2000 1999

Listed securities 202 1,133 62 Mutual funds and SICAV units 17 154 94 Negotiable debt securities and other unlisted securities 438 86 61 Provision for depreciation allowance (34) (47) (30) Net portfolio value 623 1,326 187

Market value of investment securities 692 1,397 189 including market value of listed securities, mutual funds and SICAV 254 1,311 125

62 NOTE 4 - TREASURY SHARES At December 31, 2001: • LVMH held 26,051,546 shares, 7,407,975 of which were allocated for stock options plans and the remainder, i.e. 18,643,571 for stock price equalization. • Dior had 2,830,284 shares, 2,286,064 of which were allocated for stock options plans and the balance of 544,220 for stock price equalization. LVMH and DIOR stock portfolios are assigned as follows: 2001 2001 2000 1999 EUR millions Number Amount Less than 1 year: • stock options plans 9,694,039 271 171 128 • stock price equalization or short-term investment: - gross value 19,187,791 1,217 1,199 775 - depreciation allowance (345) Total 28,881,830 1,143 1,370 903

In 2001, the following transactions were made in Dior’s stock portfolio: Stock price equalization Stock options plans or short-term investment EUR millions Number Amount Number Amount At January 1, 2001 544,220 20 1,912,400 61 Purchases – – 461,664 22 Exercised options – – (88,000) (2) Provisions – (1) (3) At December 31, 2001 544,220 19 2,286,064 78

Market value 19 The market value is based on the average quoted price of the DIOR share in December, which was EUR 34.91.

NOTE 5 - TRADE ACCOUNTS RECEIVABLE

EUR millions 2001 2000 1999

Gross value 1,680 1,749 1,531 Depreciation allowance (103) (73) (55) Net value 1,577 1,676 1,476

At December 31, 2001, an outstanding amount of EUR 260 million was securitized under a “Dailly” agreement (123 million at December 31, 2000 and nothing in 1999).

63 NOTE 6 - INVENTORIES AND WORK-IN-PROGRESS

EUR millions 2001 2000 1999

Goods 921 744 554 Finished products 1,243 1,032 852 2,164 1,776 1,406

Wines and distilled alcohol in the process of ageing 1,707 1,618 1,612 Other raw materials and work in progress 462 392 190 2,169 2,010 1,802

Total gross value 4,333 3,786 3,208 Depreciation allowance (606) (355) (220) Total net value 3,727 3,431 2,988

NOTE 7 - OTHER SHORT-TERM RECEIVABLES

EUR millions 2001 2000 1999

Currency hedging operations: deferred gains and losses 246 623 352 State - Corporate income tax 47 –– - other taxes 243 207 115 Trade accounts, advances and downpayments 204 99 453 Prepaid expenses 229 254 216 Other receivables net 565 433 776 Net value 1,534 1,616 1,912

64 NOTE 8 - INVESTMENTS IN COMPANIES ACCOUNTED FOR BY THE EQUITY METHOD

A - Value of equity investments

EUR millions 2001 2000 1999

Bonhams Brooks PS&N Ltd 41 –– De Beers LV Ltd 16 –– eLuxury.com Inc. (1) – – 2 Other investments 24 24 12 Total 81 24 14

(1) In 2001 and 2000, portion of net loss transferred to the provisions for risks and contingencies.

B - Income (loss) from investments in equity companies (included in the value of equity investments)

EUR millions 2001 2000 1999

De Beers LV Ltd (4) – – eLuxury.com Inc. (31) (38) (8) Others (7) 42

Total (42) (34) (6)

NOTE 9 - OTHER INVESTMENT SECURITIES

EUR millions 2001 2000 1999

Gross Depre- Gross Depre- Gross Depre- value ciation value ciation value ciation • Gucci group NV (Netherlands) – – 1,256 – 1,256 – • Bouygues SA (France) 819 (82) – – – – • Diageo Plc (United Kingdom) – – – – 1,967 – • LVMH treasury shares 318 – 156 – 210 – • Other investments 554 (217) 624 (120) 326 (26) Unconsolidated investments 1,691 (299) 2,036 (120) 3,759 (26) Investments acquired in 2001 (or 2000) and consolidated in 2002 (or 2001) 313 – 135 – 484 –

Total 2,004 (299) 2,171 (120) 4,243 (26)

65 1 - Unconsolidated investments Group Net Divi Share- Net Market interest book dends holders’ income value % value received equity EUR millions (1) (1) (2) Bouygues SA (France) 5 737 7 4,500 421 606 Tod’s Spa () 4 47 – 332 10 49 Investments in various Internet funds (USA) less than 20 34 – ND ND – Marnier Lapostolle (France) 10 23 1 174 29 34 Oxygen Media (USA) 10 19 – 189 (179) – SFMI SA 13 15 – 49 2 – Other investments – 78 1 – – – Investments less than 20% 953 9 Pechel Industries SA (France) 43 33 – 99 1 – L Capital FCPR (France) 48 22 – 44 (2) – Inter Parfums Inc. (USA) 21 21 – 62 7 31 Other investments 22 – – Investments between 20 and 50% 98 0 Other investments 23 – Investments greater than 50% 23 – LVMH treasury shares 318 – Unconsolidated investments 1,392 9

(1) The figures shown are prior to 12/31/2001. (2) Average stock market price for December 2001. The above-mentioned investments more than 20%-held are not consolidated to the extent that the Group has no significant influence on their management, or does not intend to keep them over the long term.

Investment in Gucci: Since 1999, LVMH had been involved in a dispute with the Pinault Printemps-Redoute (PPR) and Gucci groups; this dispute concerned the validity of two reserved capital increases on February 18 and March 19, 1999, which reduced LVMH’s stake in Gucci from 34.4 % to approximately 20 %. In September 2001, the PPR, Gucci and LVMH groups settled this dispute through a transactional agreement providing for the following: • PPR’s purchase from LVMH in October 2001 of 8.6 million Gucci shares at USD 94 a share, for a total of USD 806 million (EUR 897 million); • the payment by Gucci in December 2001 of an exceptional dividend of USD 7 per share; given LVMH’s residual interest on that date, this resulted in earnings of USD 81 million (EUR 90 million); • PPR’s tender offer in March 2004 for all of Gucci’s stock at the price of USD 101.5 per share.

66 In December 2001, LVMH sold its residual interest of 11.6 million shares to Crédit Lyonnais for USD 1,037 million (approximately 89.6 dollars per share), or EUR 1,150 million. The share disposal contract contains an “earn-out” provision entitling LVMH to an additional payment until March 2004, depending on the price of the Gucci share and dividends paid by Gucci during that period. LVMH’s total capital gain on the disposal of 20.1 million Gucci shares amounts to EUR 774 million and EUR 864 million when the exceptional dividend is taken into account.

Investment in Bouygues: The LVMH group has an interest in Bouygues, managed as part of the group’s investment portfolio. In that context, the prospects for a rise in the value of the investment must be assessed over the medium term; this interest, which had at December 31, 2000 been included in the short-term investment portfolio, has therefore been reclassified on June 30, 2001 as a long-term investment (over one year), after deduction of the block sold in July 2001 (2,650,000 shares). At December 31, 2001, a depreciation expense of EUR 82 million (approximately 10 %) was recorded to take account of the long-term drop in the stock market value of media and telecommunications stock.

Investment in Diageo: In addition to the partnership for the distribution of their products, LVMH and Diageo have maintained cross holdings for several years. At December 31, 2001, Diageo had a 34% stake in Moët , the holding company for the LVMH Wines and Spirits business group. On 31 December 2000, LVMH stake in Diageo was reduced to under 0.5% from 6.87% at December 31, 1999. The interest of the Group in Guinness, historically 20%, and then in Diageo, has been gradually reduced since 1997. LVMH’s shareholding in Diageo was accounted for using the equity method until June 30, 1998. In May 2000, the residual investment in Diageo was reclassified as a short-term investment and sold during 2001.

2 - Equity interests acquired in 2001 and consolidated in 2002 Group Net Share- Net Sales interest book holders’ income EUR millions % value equity (1) (2) Donna Karan International (USA) 89 212 48 (133) 710 SRL (Italy) (2) 95 38 (1) (1) 3 Acqua di Parma (Italy) (2) 5024––7 Rossimoda (Italy) (2) 45 23 17 6 60 Art Transfert Services (Etude Tajan) (2) 100 13 3 – 30 Others 3 Total 313

(1) Corporate or consolidated shareholders’ equity before revaluation as a result of the economic allocation of the price paid by the LVMH goup. (2) The financial data shown relate to the year 2000.

67 NOTE 10 - PROPERTY, PLANT AND EQUIPMENT

EUR millions 2001 2000 1999

Gross Depre- Gross Depre- Gross Depre- value ciation value ciation value ciation

Land 929 (5) 597 (5) 521 (5) Land and producing vineyards 557 (56) 541 (48) 532 (43) Buildings 2,275 (728) 1,923 (592) 1,768 (513) Plant and equipment 1,574 (993) 1,333 (896) 1,193 (790) Other tangible assets 1,377 (702) 1,191 (504) 847 (376) Fixed assets in progress 408 (5) 217 – 95 – Total 7,120 (2,489) 5,802 (2,045) 4,956 (1,727) inc. fixed assets acquired or financed under capital lease 340 (91) 305 (78) 296 (76)

Changes in property, plant and equipment from one period to another are analyzed as follows: EUR millions 2001 2000 1999

Gross Depre- Gross Depre- Gross Depre- value ciation value ciation value ciation Balance at beginning of year 5,802 (2,045) 4,956 (1,727) 4,201 (1,499)

Acquisitions 950 – 788 – 631 – Disposals (275) 168 (177) 125 (161) 125 Depreciation allowance – (532) – (364) – (266) Impact of changes in consolidation 582 (61) 159 (53) 92 (17) Impact of exchange rate variations 61 (19) 76 (26) 193 (70) Balance at year end 7,120 (2,489) 5,802 (2,045) 4,956 (1,727)

In 2001: Acquisitions in the year primarily concerned investments in the Louis Vuitton, DFS and Sephora retail networks. The impact of changes in consolidation is due primarily to the consolidation of La Samaritaine for EUR 471 million (which consisted of EUR 245 million for land and EUR 225 for buildings).

68 NOTE 11 - GOODWILL AND EQUIVALENT INTANGIBLE ASSETS

EUR millions 2001 2000 1999 Amortization Gross Depre- Gross Depre- Gross Depre- period value ciation value ciation value ciation and and and amor- amor- amor- tization tization tization

DFS - Galleria 20 1,996 (581) 2,061 (206) 2,061 (155) Sephora 5 to 30 587 (83) 583 (54) 418 (30) Louis Vuitton 40 365 (54) 365 (46) 365 (37) Miami Cruiseline 20 378 (38) 359 (18) – – Fendi 30 228 (10) 92 (2) – – Phillips 15 123 (123) 95 (3) – – Laflachère 20 65 (8) 63 (5) 62 (2) La Samaritaine 20 57 (3) – – – – e-Luxury 15 45 ––––– Others – 508 (191) 428 (158) 348 (138) Sub-total 4,352 (1,091) 4,046 (492) 3,254 (362)

Goodwill under French regulation 54 (24) 53 (13) 43 (10) Total 4,406 (1,115) 4,099 (505) 3,297 (372)

The goodwill on Sephora includes the value of selective retailing brands in Perfumes and Cosmetics: “Sephora”, present in several European countries, as well as “Carmen”, “Laguna” and “Boïdi” in Italy, and “Beauty Shop” (Marinopoulos) in Greece. Louis Vuitton’s goodwill does not represent a price paid for acquiring the brand, since this was developed by the Group; it is the result of successive acquisitions of minority interests in the different legal structures of the Louis Vuitton subgroup. Goodwill amortization periods, ranging from 5 to 40 years, are determined according to the estimate of their permanence at first consolidation; this estimate is made with reference to the position of the acquired company in its market, especially its positioning, age and geographic locations. Goodwill on DFS: Successive international crises (economic crisis in South East Asia, tragic events at the World Trade Center) since LVMH assumed control of DFS have temporarily had highly negative impacts on the level of activity and results of DFS. Moreover, the economic situation in , the major changes occurring in that country, and the yen/dollar exchange rate, especially in 2001, have persistently reduced the number of Japanese tourists, the principal customers of DFS, as well as the purchasing power of Japanese tourists. In order to account for the long-term drop in the level of activity and profitability of DFS and the greater volatility of its results in comparison with Group expectations at the time of its acquisition, the following was decided in 2001: • to record an exceptional amortization expense of EUR 323 million, reducing the net book value of the goodwill to a level justified by discounted future cash flows; • reduction of the goodwill amortization period from 40 to 20 years; the net book value of EUR 1,415 million at December 31, 2001 will be thus be amortized by 1/15th.

69 NOTE 12 - BRANDS AND OTHER INTANGIBLE ASSETS EUR millions 2001 2000 1999 Gross Depre- Gross Depre- Gross Depre- value ciation value ciation value ciation and and and amor- amor- amor- tization tization tization Brands* 8,882 (21) 7,979 (5) 7,138 (4) Leasehold rights 213 (72) 137 (38) 104 (31) Others 297 (198) 248 (143) 167 (95) Total 9,392 (291) 8,364 (186) 7,409 (130)

* Brands break down as follows: EUR millions 2001 2000 1999 Gross Depre- Gross Depre- Gross Depre- value ciation value ciation value ciation and and and amor- amor- amor- tization tization tization Louis Vuitton 2,058 – 2,058 – 2,058 – Hennessy 1,067 – 1,067 – 1,067 – Tag Heuer 837 – 823 – 735 – Moët 732 – 732 – 732 – 610 – 610 – 610 – 441 – 441 – 441 – Fendi (1) 809 – 404 – – – Donna Karan New York (2) 460 ––––– Céline 351 – 351 – 351 – 244 – 244 – 244 – Parfums 152 – 152 – 152 – Ebel 123 – 125 – – – Loewe 122 – 122 – 122 – Château d’Yquem 108 – 108 – 108 – Krug 100 – 100 – 100 – Others (< 100 ME) 668 (21) 642 (5) 418 (4) Total 8,882 (21) 7,979 (5) 7,138 (4)

(1) See “Changes in Group consolidation”. (2) Provisional value corresponding to the investment in Gabrielle Studio only. The “acquired” brands not detailed in the “other” item above are primarily: • Wines and Spirits: Pommery, Canard Duchêne, Newton Vineyards, MountAdam, and Mercier • Fashion and Leather Goods: Givenchy, Kenzo, Christian Lacroix, and Thomas Pink • Perfumes and Cosmetics: Parfums Kenzo, Bliss, Make Up For Ever, Urban Decay, Hard Candy, BeneFit Cosmetics and Fresh. • Watches and Jewelry: Zenith, Fred, Chaumet and Omas. • Other activities: La Tribune and newspapers.

70 NOTE 13 - OTHER BORROWINGS AND FINANCIAL DEBTS A - Type of financial debt Swap to Interest floating EUR millions rate rate Maturity 2001 2000 1999

Bonds issues Public issues: EUR 500,000,000, 2001 6.125 % total 2008 500 – – EUR 850,000,000, 2001 (1) 5.375 % partial 2004 850 – – EUR 600,000,000, 2000 (2) 5.75 % total 2005 600 600 – EUR 800,000,000, 1999 (3) 5.00 % total 2006 800 800 800 EUR 150,000,000, 1999 3.75 % total 2001 – 150 150 FRF 1,300,000,761, 1998 indexé (4) 1.00 % total 2005 198 198 198 USD 200,000,000, 1997 6.75 % total 2000 – – 176 FRF 1,500,000,000, 1996 5.25 % total 2002 229 229 229 Private placements (Euro Medium Term Notes program) : EUR 130,000,000, 2001 floating – 2003 130 – – EUR 150,000,000, 2001 floating – 2002 150 – – SDG 125,000,000, 2001 4.00 % total 2006 79 – – EUR 55,000,000, 2001 floating – 2006 55 – – JPY 3,000,000,000, 2001 0.16 % – 2002 26 – – JPY 2,400,000,000, 2001 0.15 % – 2002 21 – – EUR 20,000,000, 2001 floating – 2002 20 – – JPY 2,000,000,000, 2001 0.65 % total 2004 19 – – JPY 1,500,000,000, 2001 0.95 % total 2006 14 – – JPY 1,500,000,000, 2001 0.21 % total 2002 14 – – JPY 1,100,000,000, 2001 floating – 2006 10 – – JPY 1,000,000,000, 2001 floating – 2006 9 – – EUR 120,000,000, 2000 floating – 2002 120 120 – SGD 100,000,000, 2000 3.55 % – 2001 – 64 – EUR 60,000,000, 2000 floating – 2001 – 60 – EUR 40,000,000, 2000 floating – 2004 40 40 – EUR 30,000,000, 2000 floating – 2005 30 30 – EUR 25,000,000, 2000 floating – 2002 25 25 – EUR 18,500,000, 2000 floating – 2001 – 19 – HKD 100,000,000, 2000 floating – 2003 15 15 – EUR 275,000,000, 1999 (5) Euribor 1 month – 2000 – – 275 Financial lease liabilities and long-term rentals 2001 to 2006 178 166 147 Other financial debts 2001 to 2009 1,610 1,314 1,546

Total 5,742 3,830 3,521 Short-term portion (6) (340) (331) (436) Long-term portion 5,402 3,499 3,085

Unless otherwise indicated, bonds are redeemable at par at maturity. All bonds issued in foreign currencies were transformed into euros through swaps, except the SGD 125,000,000 bond which was transformed into dollars. The swaps mentioned here are those made upon issuance of the bonds and do not include subsequent interest-rate hedges.

71 (1) 2001 bond of EUR 850 million, bearing interest at the rate of 5.375 %, issued as follows: • first tranche of EUR 800 million issued at 99.616 % of par value, • second tranche of EUR 50 million, issued at 101.036 % of par value. (2) 2000 bond of EUR 600 million bearing interest at the rate of 5.75 %, issued as follows: • first tranche of EUR 400 million, issued at 99.513 % of par value, • second tranche of EUR 150 million, issued at 98.563 % of par value, • third tranche of EUR 50 million, issued at 98.846 % of par value. (3) 1999 bond of EUR 800 million, bearing interest at the rate of 5.00%, issued as follows: • first tranche of EUR 500 million, issued at 99.515 % of par value, • second tranche of EUR 200 million, issued at 97.395 % of par value, • third tranche of EUR 100 million, issued at 96.653 % of par value. (4) Indexed bond issued at par linked to a benchmark LVMH stock price of EUR 42.33, fully redeemable on maturity at the greater of par value or the average of the last 10 stock prices before May 1, 2005, or redeemed in advance at the bondholder’s request between May 15, 2002 and April 15, 2005 based on the LVMH stock price, or redeemed in advance at the bond issuer’s request between April 15 and May 14 2002 at 150% of par value; this borrowing was fully swapped and transformed into non-indexed, floating-rate debt when issued. (5) Bond bearing interest at the Euribor 1 month floating rate, issued at 100 % of par value, fully redemable at par in 2000. (6) At December 31, 2001, unused long-term irrevocable credit lines exceeded EUR 1.9 billion. Due to these commitments, a fraction of the current portion of long-term debt was maintained under long-term debt, representing EUR 418 million. In addition, due to the existence of renewal authorizations, part of short-term debt was reclassified under long-term debt, namely EUR 579 million (EUR 272 million at December 31, 2000, EUR 882 million at December 31, 1999).

B - Analysis by maturity date and currency EUR millions

Maturity 2001 Currencies 2001 2000 1999 2002 341 Euros 4,720 3,307 2,547 2003 1,432 Yens 165 80 73 2004 1,120 Dollars US 603 204 369 2005 980 CHF 5 22 495 2006 1,189 dollars 79 64 – 2007 and beyond 680 Other currencies 170 153 37

Total 5,742 Total 5,742 3,830 3,521

72 NOTE 14 - SHORT-TERM BORROWINGS: ANALYSIS BY TYPE AND BY CURRENCY

EUR millions 2001 2000 1999 2001 2000 1999

Commercial paper (1) 2,837 3,670 2,454 Euro (3) 4,342 4,905 4,320 Other credit lines 1,610 2,148 2,201 JPY 235 360 327 Bond issue (2) – – 600 USD 111 633 431 Bank overdraft 603 619 396 GBP 7 61 47 Other currencies 355 478 526 Total short-term borrowings 5,050 6,437 5,651 5,050 6,437 5,651

(1) Commercial paper concerns LVMH. (2) Redeemable at par and yielding interest at a floating rate. (3) Part of the other euro-denominated financial debt was swapped at one to three months, and transformed into foreign currency outstanding debts of CHF 1,336 million, GBP 104 million, JPY 6,100 million and USD 566 million.

At December 31, 2001, the unused and secured short term credit lines totaled approximately EUR 2.9 billion.

NOTE 15 - OTHER SHORT-TERM LIABILITIES

EUR millions 2001 2000 1999 Foreign currency hedging - deferred gains and losses 276 388 249 Personnel charges 358 362 223 Taxes 196 533 270 Advances and dowpayments received from customers 116 116 89 Deferred payments on fixed assets or long-term investments 235 70 38 Reorganization allowance 171 154 119 Allowance for returned stock 116 119 53 Other provisions for risks and contingencies 202 217 673 Prepaid income 20 73 25 Other liabilities 1,073 824 1,110 Total 2,763 2,856 2,849

73 NOTE 16 - REPACKAGED NOTES

Issuance dates December 1990 February 1992

Nominal (EUR millions) 762 229 Issue price At par value At par value Face interest rate EURIBOR 6 months + 0.45 % 9.70 %

Balance at December 31 (EUR millions) 2001 195 89 2000 245 101 1999 294 112

In 1990 and 1992, LVMH issued, outside of France, two series of subordinated notes (“repackaged subordinated notes”), having the following conditions: • repayable at par value only in the event of liquidation or voluntary dissolution of LVMH, except for that resulting from a merger or spin-off; • principal payments subordinated to the full payment of all other creditors; • possibility to suspend interest payments if specific financial ratios are not achieved. In 1996, due to an amendment to the 1990 repackaged subordinated notes agreement which eliminated the second and third of the aforementioned conditions, these notes were reclassified in debt as repackaged notes. The repackaged subordinated notes issued in 1992 were simultaneously reclassified as a result of the pari-passu clause in their agreement. Although there are no fixed repayments terms, the repackaged notes are recorded on the balance sheet for an amount that will be progressively reduced to a nil value at the end of a fifteen-year period, arising from agreements entered with third parties. In accordance with these agreements and in return for an initial lump sum payment by LVMH, the third-party companies have promised to hold or to repurchase the notes from noteholders after a fifteen-year period, and have agreed to relinquish any rights for interest on these notes after that time. According to these arrangements: • the repackaged notes have been recorded in the balance sheet at issuance at their par value, after deduction of the aforementioned payments; each year, these notes are subject to an amortization corresponding to the interest yielded by these payments’ investment effected by the third party companies, • the consolidated net result of each year is impacted by the interest expense borne on the par value, after the aforementioned amortization.

74 NOTE 17 - OTHER MEDIUM - AND LONG-TERM LIABILITIES EUR millions 2001 2000 1999 Liabilities for supplementary pension plans, early retirement plans and retirement bonus 258 218 160 Employee profit sharing plans 50 57 67 Provisions for risks and contingencies 548 658 440 Reorganization allowance 160 64 124 Deferred payments for equity investments 114 49 – Other liabilities 192 119 131 Total 1,322 1,165 922

NOTE 18 - CAPITAL STOCK - CHANGES IN SHAREHOLDERS’ EQUITY AND MINORITY INTERESTS

A - Capital stock At December 31, 2001, the capital stock consists of 181,721,048 shares (including 106,847,238 shares with double voting rights). The maximum number of shares to be issued through the exercise of stock options granted under the authority from the Shareholders’ Meeting of June 11, 1993 is 6,000 shares. The number of shares issued in 2001 totaled: • 460,000 shares through the exercise of stock options for EUR 3,593,985.58. In 1999, 2000 and 2001, Christian Dior respectively acquired 401,780, 534,464 and 461,664 of its own shares and disposed of 10,000 in 2000 and 88,000 in 2001.The Board of Directors’ granted the following stock options for a total of 2,359,900 shares: • at its meeting on October 14, 1996: 378,400 shares at the unit price of EUR 25.95 per share to be exercised between December 1, 1999 and November 30, 2006 to the company’s executives and executives in subsidiaries and sub-subsidiaries; • at the meeting on May 29, 1997: 391,600 shares at the unit price of EUR 32.01 per share to be exercised between May 30, 2002 and May 29, 2007 to the company’s executives and executives in subsidiaries and sub-subsidiaries; • at the meeting on November 3, 1998: 393,600 shares at the unit price of EUR 18.29 per share to be exercised between November 4, 2003 and November 3, 2008, to the company’s executives and executives in subsidiaries and sub-subsidiaries; • at the meeting on January 26, 1999: 358,000 shares at the unit price of EUR 25.36 per share to be exercised between January 25, 2004 and January 24, 2009, to the company’s executives and executives in subsidiaries and sub-subsidiaries; • at the meeting on February 15, 2000: 400,800 shares at the unit price of EUR 56.70 per share to be exercised between February 15, 2005 and February 14, 2010, to the company’s executives and executives in subsidiaries and sub-subsidiaries; • at the meeting on February 21, 2001: 437,500 shares at the unit price of EUR 45.95 per share to be exercised between February 21, 2004 and February 20, 2011, to the company’s executives and executives in subsidiaries and sub-subsidiaries.

75 B - Changes in shareholders’ equity and minority interests EUR millions 2001 2000 1999

Group Mino- Group Mino- Group Mino- rities rities rities

At January 1 3,972 8,374 3,887 7,807 3,724 7,268

Income for the period (95) 97 251 636 264 538 Dividends and advances paid (51) (369) (51) (255) (45) (266) Impact of foreign currency translation of foreign company financial statements (4) 5 (6) (2) 6 33 Impact of capital increases 4 – – – 8 Changes in consolidation – 393 – 227 – 210 Changes in LVMH treasury shares 51 158 (21) (41) 10 24 Others – – 1 2 – –

At December 31, before appropriation 3,877 8,658 4,061 8,374 3,967 7,807 Balance of Christian Dior SA dividend (paid in June) (89) – (89) – (80) – At December 31, after appropriation 3,788 8,658 3,972 8,374 3,887 7,807

76 NOTE 19 - STOCK OPTION PLANS

Subscription plans Meeting date Grant Number Number Exercise Number Outstanding date of options of bene- price of options options at granted ficiaries (in euros) exercised December 31 (1) (2) (3) in 2001 (2) 2001 (2) LVMH June 4, 1987 March 20, 1991 53,158 1,101 15.85 33,950 – June 4, 1987 March 18, 1992 47,498 861 20.89 8,820 40,855 Christian Dior June 11, 1993 June 11, 1993 150,000 4 7.81 460,000 – June 11, 1993 May 30, 1996 2,250 2 21.49 – 6,000

Purchase plans Meeting date Grant Number Number Exercise Number Outstanding date of options of bene- price of options options at granted ficiaries (in euros) exercised December 31 (1) (2) (3) in 2001 (2) 2001 (2) LVMH May 25, 1992 March 17, 1993 49,681 548 15.40 6,210 64,135 May 25, 1992 March 16, 1994 139,031 364 17.84 10,660 1,598,240 May 25, 1992 June 17, 1994 1,250 1 17.68 – 7,565 May 25, 1992 March 22, 1995 256,903 395 20.89 20,240 449,620 June 8, 1995 May 30, 1996 233,199 297 34.15 198,195 797,095 June 8, 1995 May 29, 1997 233,040 319 37.50 56,910 1,127,810 June 8, 1995 January 29, 1998 269,130 346 25.92 99,400 1,315,730 June 8, 1995 March 16, 1998 15,800 4 31.25 – 86,900 June 8, 1995 January 20, 1999 320,059 364 32.10 3,025 1,740,880 June 8, 1995 September 16, 1999 44,000 9 54.65 – 220,000 June 8, 1995 January 19, 2000 376,110 552 80.10 – 1,879,550 May 17, 2000 January 23, 2001 2,649,075 786 65.12 – 2,649,075 May 17, 2000 March 06, 2001 40,000 1 63.53 – 40,000 May 17, 2000 May 14, 2001 1,105,877 44,669 66.00 – 1,105,877 May 17, 2000 May 14, 2001 552,500 4 61.77 – 552,500 May 17, 2000 September 19, 2001 50,000 1 52.48 – 50,000 Christian Dior May 30, 1996 October 14, 1996 94,600 21 25.95 88,000 284,400 May 30, 1996 May 29, 1997 97,900 22 32.01 – 389,600 May 30, 1996 November 3, 1998 98,400 23 18.29 – 391,600 May 30, 1996 January 26, 1999 89,500 14 25.36 – 358,000 May 17, 2000 February 15, 2000 100,200 20 56.70 – 400,800 May 14, 2001 February 21, 2001 437,500 17 45.95 – 437,500

(1) Number of options at the plan’s issuance not restated to reflect the subsequent adjustments resulting from the one-for-ten bonus share allotments in September 1991, July 1994 and June 1999, and the five-for-one split in March 1994 and July 2000, for LVMH, and the four-for-one-split in July 2000 for Dior. (2) Adjusted to reflect the transactions referred to in (1) above. (3) Figures prior to the 1999 financial year are derived from the conversion into euros of data initially recorded in francs.

77 Number of options 2001 2000 1999

Outstanding options at January 1 12,148,265 2,168,189 2,674,494 LVMH bonus share distribution – – 201,079 Five-for-one stock split (LVMH) – 6,682,156 – Four-for-one stock split (Dior) – 1,492,950 – Options granted 4,834,952 2,281,350 453,559 Options exercised (985,410) (473,120) (931,278) Expired options (4,075) (3,260) (229,665)

Outstanding options at December 31 15,993,732 (4) 12,148,265 (5) 2,168,189 (6)

(4) inc. 13,725,832 LVMH shares 2,267,900 Christian Dior shares (5) inc. 9,769,865 LVMH shares 2,378,400 Christian Dior shares (6) inc. 1,670,539 LVMH shares 497,650 Christian Dior shares

Granted by LVMH Group subsidiaries: The option plans created in 1999 and in 2000 by e.Luxury and Sephora.com ended in 2001 due to the fact that all the beneficiaries waived their options.

NOTE 20 - DESIGN COSTS Design costs posted as expenses for the year amounted to EUR 25 million in 2001 (55 in 2000 and 76 in 1999). These figures cover expenses linked to design studios, designer fees, costs of manufacturing prototypes for collections and new products.

NOTE 21 - RESEARCH AND DEVELOPMENT COSTS Research and development costs amounted to EUR 27 million in 2001 (21 in 2000; 26 in 1999). These amounts are cover costs incurred in scientific research and new product development. Research and development costs extended to “packaging” and “design” amounted to EUR 37 million in 2001 (EUR 40 million in 2000; EUR 37 million in 1999).

78 NOTE 22 - FINANCIAL INCOME EUR millions 2001 2000 1999

Financial expense (728) (571) (326) Financial income 222 127 70 Income from sale or short-term securities (33) 7 (9) Depreciation allowance for short-term securities 17 (17) 21 Income from foreign currency operations 23 (13) (10) Total (499) (467) (254)

A - Exposure to foreign currency risks and hedging 1 - In the group’s French companies, foreign currency risks are mainly related to commercial (net sales in foreign currency) and to a lesser extent, financial (investments, foreign currency financing) operations.

Commercial operations: Some Group subsidiaries earn a considerable portion of their commercial transactions in foreign currency. For example, 2001 net sales were earned in the currencies below: EUR millions Value % Euros 3,916 31 US Dollars 4,050 32 Yens 1,983 16 HK Dollars 592 5 Pound Sterling 478 4 Other currencies 1,548 12

Net sales 12,567 100

Excluding hedging effect, a 1% fluctuation in the major currencies (US dollar, yen, HK dollar, pound sterling) would have caused a change in net income of EUR 46 millions.

Financial operations: Certain financial operations, such as loans, may be in foreign currencies based on anticipated future revenues in foreign currency or changes in exchange rate. Various financial instruments are used to hedge against exchange rate risks, such as foreign currency swaps, futures contracts and currency options. In accordance with the currency translation methods stated in the accounting principles (note 2 - 2) the hedging instruments used are assigned either to trade receivables or debts, or to estimated transactions for the following year. The unrealized losses and gains resulting from this translation revalued at the December 31 exchange rate are: • recorded in the statement of income when they concern hedging instruments assigned to receivables or liabilities; • deferred if they are designated as hedges for transactions for the following accounting period.

79 All the hedging contracts existing at December 31, 2001, in all currencies are shown below by type and by amounts of capital hedged: EUR millions Hedging amounts assigned to Evaluation at December 31, 2003 Deferred income 2001 rate 2001 2002 to 2005 (charges) net of tax • Contracts hedging commercial risks – Forward sales US dollar 130 31 20 (1) Yen 15 20 27 7 Other currencies 6 56 6 1 151 107 53 7 – Options US dollar 50 1,082 302 Yen – 540 103 Other currencies – 111 10 74 50 1,733 415 74 201 1,840 468 81 • Contracts hedging financial risks – Net assets and dividends Forward sales 75 – – – Options – 82 – 5 – Other operations Forward sales 37 – – – Options (106) – – – 682 5

2 - Income from subsidiaries with accounts denominated in British pound sterling, Japanese yens and US dollar-indexed currencies accounted for EUR 205 million of consolidated net income excluding unusual items. A 10% fluctuation in the exchange rate of these currencies would have an impact of EUR 23 million on the consolidated income from operations, and EUR 21 million on consolidated net income.

B - Exposure to interest rate risks and hedging Various financial instruments are used to hedge exchange rate risks: rate swaps, caps, etc. The type of hedging contracts in force at December 31 2001, and the amount of hedged capital is analyzed below, in millions of euros: Maturity dates – 1 year 1 to 5 years 5 to 10 years Swaps yielding fixed interest rates 469 – – Swaps yielding floating interest rates 3,919 3,122 711 Caps purchased 966 3,054 – Floors sold – 715 –

Taking into consideration the above instruments, capped fixed-rate or floating rate debt (including the repackaged notes (TDI) represents approximately 25% of total consolidated debt. Under these conditions, an interest rate fluctuation of 1% would impact net income by EUR 68 million.

80 NOTE 23 - INCOME TAXES EUR millions 2001 2000 1999 Current income taxes (456) (682) (567) Deferred income taxes 262 47 12 Total (194) (635) (555)

In 1999, French companies were subject to a surtax of 20% of the basic rate, reduced to 13 % in 2000 and to 9.3 % in 2001. This surtax resulted in an additional tax expense of EUR 8 million for fiscal year 2001 (EUR 45 million in 2000 and EUR 50 million in 1999). At December 31, 2001, the Group had available unused operating loss carry-forwards of EUR 693 million (EUR 476 million in 2000; EUR 327 million in 1999). Tax sharing agreements allow certain French companies of the Group to combine their taxable results to determine the overall tax expense for which only the parent company is fully liable. The application of these agreements allowed the Christian Dior group to record income tax savings of EUR 313 million at December 31, 2001 (64 in 2000; 26 in 1999). Main components of the income tax charge:

• On the statement of income EUR millions 2001 2000 1999

Deferred foreign exchange gains and losses (21) 21 (3) Inter-company profits included in inventories 2 20 14 Valuation discrepancies 34 8 1 Provisions for risks and contingencies (20) (12) (3) Other adjustments and consolidation entries 31 23 6 Losses carried over 246 –1 Impact of income tax changes (10) (13) (4) Credit for the year 262 47 12

• On the balance sheet EUR millions 2001 2000 1999

Inter-company profits included in inventories 153 146 117 Valuation discrepancies (271) (145) (147) Provisions for risks and contingencies 95 79 127 Consolidation adjustments (1) 26 96 28 Unrealized capital gains or losses 48 (8) (8) Losses carried over 248 (4) (4) Others 33 (9) (9) Net deferred income taxes 332 155 104 short-term deferred tax credit 503 269 275 long-term deferred tax liability 171 114 171

(1) Primarily regulated reserves, supplementary amortization for tax purposes and finance lease.

81 Analysis of the difference between the effective tax rate and the French statutory tax rate: The reconciliation between the French statutory tax rate, applied to French companies, and the effective tax rate recorded in the consolidated financial statements breaks down as follows: (as % of income before taxes) 2001 2000 1999

French statutory tax rate 33 1/3 33 1/3 33 1/3 • Temporary supplementary income tax applicable to French companies 3.24 2.80 3.50 • Impact of differences between foreign and French tax rates (5.10) (4.00) (2.50) • Subsidiaries’ or tax consolidation losses (2.07) 9.60 6.80 • Impact of differences between consolidated, taxable incomes and incomes taxed at a reduced rate 2.10 (3.80) (2.20) • Impact of withholding tax 1.00 0.50 0.30 Effective tax rate 32.50 38.40 39.20

NOTE 24 - NET GOODWILL AMORTIZATION EUR millions 2001 2000 1999 Companies consolidated by: • Full consolidation (151) (131) (93) • Under the equity method (8) –– Total (159) (131) (93)

See note 25: Unusual items, for the amortization charge recorded in this account.

82 NOTE 25 - UNUSUAL ITEMS Unusual items are presented net of their positive impact on income taxes, representing an income of EUR (199) million in 2001 (EUR 35 million in 2000 and EUR 41 million in 1999).

In 2001: Unusual items included earnings of EUR 864 million provided by Gucci, including a capital gain of EUR 774 million from the sale of these Gucci shares and an exceptional dividend of EUR 90 million recorded during the fourth quarter of the year. Unusual items with a negative impact included a restructuring provision of EUR 446 million, including EUR 385 million for selective retailing. Exceptional asset depreciation or amortization expenses of EUR 480 million were also recorded: they include EUR 323 million for DFS goodwill, EUR 82 million for the Bouygues investment and EUR 60 million for media and telecommunications investments. The accounts at December 31, 2001 also showed an expense of EUR 141 million relating to the sale of the group’s controlling interest in Phillips, de Pury & Luxembourg to its current management; this expense mainly corresponds to the full amortization of goodwill.

In 2000: Unusual items included capital gains from sale of shares, particularly of Diageo shares, amounting to EUR 78 million, EUR 87 million set aside as depreciation allowance for investments or funds in the e-business activity, and exceptional costs of EUR 57 million incurred to develop the Phillips business and promote its image.

In 1999: In the financial statements of LVMH Group, unusual items included the net income of EUR 315 million, realized in April as a result of the Diageo share buyback program to which LVMH contributed approximately 143 million shares, and a provision of EUR 37 million for the residual interest. Unusual items also recorded EUR 66 million for indirect acquisition costs of shareholdings, EUR 53 million for the impairment of assets, primarily intangibles and provisions of approximately EUR 68 million relating to the reorganization costs of the Fashion business group and other logistics reorganization costs. Considering that assets sold by LVMH have a higher consolidation value in Christian Dior’s books than what is recorded in LVMH accounts, the accounting results were adjusted to reflect this difference; the capital gain from Diageo totaled EUR 280 million.

* * * For 1999 and 2000, the balance of “unusual items” corresponds to exceptional changes in contingency and loss provisions.

83 NOTE 26 - COMMITMENTS AND CURRENT LITIGATION

A - Lease commitments • At December 31, 2001, a total number of 1,617 stores were used by the group worldwide, particularly for the Fashion and Leather Goods and Selective Retailing groups. In a large number of countries, rentals for these stores are contingent on payment of minimal amounts, especially when the leases include revenue-indexed rent clauses; this is particularly true in cases where airport concession fees are paid. In addition, the leases may also include non-adjustable minimum terms. • The group also finances part of its equipment through simple, long-term operating leases. • Lastly, some capital assets or manufacturing equipment were acquired or refinanced through finance-lease or lease-back agreements. At December 31, 2001, future non-cancelable commitments arising from these arrangements could be analyzed as follows: Operating Concession Capital EUR millions leases fees leases

2002 287 278 99 2003 243 257 31 2004 226 185 11 2005 213 152 9 2006 187 53 9 2007 and subsequent years 781 116 33 Lease commitments 1,937 1,041 192 Amounting representating interests (14) Current value of lease commitments 1,937 1,041 178

B - Other commitments given a) In the Wines and Spirits business group, some companies have contractual arrangements with various local growers to supply a portion of their future requirements for grapes, light wine or distilled alcohol. Based upon either contractual prices or latest current market prices and anticipated yields, these commitments amounted to EUR 413 million at December 31, 2001 (407 in 2000; 287 in 1999); they principally concern the supplies for 2002 and 2003. b) Contractual commitments entered into by the Group to purchase minority interests in consolidated subsidiaries or additional interest in unconsolidated subsidiaries mainly result from the Memorandum of Understanding signed on January 20, 1994 between LVMH and Diageo. According to this agreement, LVMH committed to repurchase the Diageo 34% investment in Moët Hennessy, with a six-month notice and for an amount equal to 80% of the investment value at the date of notice. On the date of the Memorandum, the Diageo investment in Moët Hennessy was assessed at more than EUR 1.2 billion. The other commitments to purchase minority interests in consolidated subsidiaries, additional interest in unconsolidated investments or to pay potential earnouts totaled EUR 975 million.

84 c) The Group had committed the amount of EUR 80 million at December 31, 2001 (111 in 2000; 65 in 1999) to purchase property, plant and equipment, EUR 11 million of which is related to the purchase of casks over a three-year period. d) In the ordinary course of its business, the Group is a party from time to time to legal proceedings and claims involving trademarks and intellectual property, selective retailing agreements, licensing, employees relations, tax audits and other matters incidental to its business. The Group estimates that the provisions included in the balance sheet, related to litigation and contingent liabilities known or in-process at December 31, 2001, are sufficient to cover any unfavorable outcome, so that the Group financial position would not be significantly affected. e) Deposits, pledges and other guarantees given amounted to EUR 499 million at December 31, 2001. Guarantees received totaled EUR 15 million.

NOTE 27 - EVENTS THAT OCCURRED AFTER THE YEAR END In February 2002, a draft agreement was drawn up between LVMH and the managers of Phillips, de Pury & Luxembourg, Mrs. Daniella Luxembourg and Mr. Simon de Pury, who on that date held 25 % of Phillips. Under the terms of this agreement, which should be implemented as of April 2002: • LVMH will transfer the control of Phillips to its managers, decreasing its stake from 75 to 27.5 %. • prior to this, a certain number of operations will be carried out by LVMH, particularly: capitalization of the new holding company, relinquishing of part of the financing and takeover of some of Phillips’ assets. Financial support will also be set up to ensure future trade development. At December, 31 2001, the impacts of this agreement on the assets in LVMH’s balance sheet on that date were recognized, representing a total expense of EUR 141 million posted to unusual items; this amount includes the full amortization of the goodwill resulting from the transfer of the control of Phillips.

85 NOTE 28 - EMPLOYEE INFORMATION Payroll charges totaled EUR 2,310 million (2,041 in 2000; 1,437 in 1999). The average number of employees in 2001 was 54,463 (48,524 in 2000; 39,259 in 1999). At December 31, the employees of fully consolidated companies were as follows:

By business group 2001 2000 1999 Christian Dior Couture 1,383 1,195 1,005 Wines and Spirits 5,089 5,154 4,992 Fashion and Leather Goods 13,402 11,006 9,116 Perfumes and Cosmetics 13,087 12,758 11,800 Watches and Jewelry 2,233 1,830 929 Selective Retailing 18,542 18,540 13,512 Other activities 1,443 1,840 886 Total 55,179 52,323 42,240

By geographic region 2001 2000 1999 France 20,399 19,009 17,873 Europe (excluding France) 10,194 9,150 6,378 U.S.A. 12,235 12,240 7,935 Japan 3,591 3,036 2,505 Asia Pacific 8,760 8,888 7,549 Total 55,179 52,323 42,240

By category 2001 2000 1999 Labor and production 9,116 8,447 7,595 Office and clerical 31,730 29,781 23,981 Technicians 5,066 4,767 4,121 Executives and management 9,267 9,328 6,543 Total 55,179 52,323 42,240

Compensation Compensation paid to Christian Dior directors and officers, for their duties in consolidated companies, totaled 11,957 thousand euros.

86 NOTE 29 - INFORMATION SPECIFIC TO BUSINESS GROUPS 1. Net sales EUR millions 2001 2000 1999 (1) Christian Dior Couture 350 296 220 Wines and Spirits 2,232 2,336 2,240 Fashion and Leather Goods 3,612 3,202 2,295 Perfumes and Cosmetics 2,231 2,072 1,703 Watches and Jewelry 548 614 135 Selective Retailing 3,475 3,287 2,162 Other activities, eliminations and restatements 119 60 3 Total 12,567 11,867 8,758

2. Income from operations EUR millions 2001 2000 1999 Christian Dior Couture (5) 14 9 Wines and Spirits 676 716 655 Fashion and Leather Goods 1,274 1,169 826 Perfumes and Cosmetics 149 184 146 Watches and Jewelry 27 59 5 Selective Retailing (194) (2) (2) Other activities, eliminations and restatements (379) (173) (88) Total 1,548 1,967 1,551

3. Breakdown of assets EUR millions 2001 2000 1999 Christian Dior Couture 676 560 524 Wines and Spirits 4,352 4,572 4,568 Fashion and Leather Goods 4,619 3,342 2,434 Perfumes and Cosmetics 2,257 2,316 1,990 Watches and Jewelry 1,618 1,557 981 Selective Retailing 4,878 5,063 4,164 Other activities, eliminations and restatements 10,828 11,025 11,669 Total 29,228 28,435 26,330

4. Inventories and work in progress EUR millions 2001 2000 1999 Christian Dior Couture 75 50 45 Wines and Spirits 2,018 1,953 1,902 Fashion and Leather Goods 395 280 284 Perfumes and Cosmetics 282 265 187 Watches and Jewelry 194 164 70 Selective Retailing 590 657 504 Other activities, eliminations and restatements 173 62 (4) Total 3,727 3,431 2,988

(1) 1999 figures have been restated to reflect the reclassification of Tag Heuer, Fred and Benedom in the group’s Watches and Jewelry business segment, Thomas Pink in the Fashion and Leather Goods group, and Sephora.com and e-Luxury.com in Other Businesses.

87 NOTE 30 - INFORMATION BY GEOGRAPHIC REGION EUR millions 2001 2000 1999 Export from French companies 3,742 3,393 2,982 Exports as a percentage of the sales of French companies 65% 64% 64% Percentage of consolidated net sales earned outside France 83% 85% 80%

The information below is presented on the basis of the subsidiaries’ geographic locations and not on the basis of the final destination of products sold:

1. Net sales EUR millions 2001 2000 1999 France 5,770 5,320 4,648 Europe (excluding France) 2,426 2,143 1,304 U.S.A. 3,228 3,091 1,915 Japan 1,825 1,721 1,277 Asia (excluding Japan) 2,101 2,140 1,663 Other countries 569 564 429 Total 15,919 14,979 11,236 Eliminations (3,352) (3,112) (2,478) Total 12,567 11,867 8,758

2. Income from operations EUR millions 2001 2000 1999 France 1,238 1,185 975 Europe (excluding France) 31 108 65 U.S.A. (369) (89) 4 Japan 334 288 208 Asia (excluding Japan) 289 432 257 Other countries 25 43 42 Total 1,548 1,967 1,551

3. Breakdown of assets EUR millions 2001 2000 1999 France 17,206 17,014 17,579 Europe (excluding France) 4,262 4,532 3,097 U.S.A. 4,436 3,266 2,097 Japan 675 636 581 Asia (excluding Japan) 2,056 2,281 2,383 Other countries 593 706 593 Total 29,228 28,435 26,330

88 NOTE 31 - LIST OF CONSOLIDATED COMPANIES IN 2001 All the companies below are fully consolidated except for those indicated by the number (2), which are consolidated under the equity method and those indicated by (1) which are consolidated on a proportionate basis. PERCENTAGE COMPANIES HEAD OFFICE Control Interest Christian Dior Couture Christian Dior Couture SA Paris, France 100% 100% S.A.M. Christian Dior Monaco 96% 96% Christian Dior GmbH Munich, Germany 100% 100% Christian Dior, Inc. New York, U.S.A. 100% 100% Christian Dior Retail - UK Ltd London, United Kingdom 100% 100% Christian Dior (Suisse) SA Geneva, Switzerland 100% 100% Les Jardins d’Avron Paris, France 100% 100% Mardi SpA Badia e Settimo, Italy 50% 50% Ateliers AS (2) Pierre Bénite, France 25% 25% Christian Dior Far East 100% 100% Christian Dior Fashion Malaysia Kuala-Lumpur, Malaysia 100% 100% Christian Dior Malaysia Ltd Kuala-Lumpur, Malaysia 100% 100% Christian Dior Hong Kong Hong Kong 100% 100% Christian Dior Taiwan Taïpei, Taiwan 90% 90% Christian Dior Singapour Singapore 100% 100% Christian Dior Saïpan Saïpan, NMI 100% 100% Christian Dior Australia , Australia 100% 100% Christian Dior Auckland, New Zealand 100% 100% Christian Dior (Thailand) Bangkok, Thailand 100% 100% Christian Dior KK , Japan 100% 100% Christian Dior Couture Korea Ltd Seoul, South Korea 100% 100% Christian Dior Ltd Agana, Guam 100% 100% Montaigne Española Barcelona, Spain 100% 100% CD do Brazil Sao Paulo, Brazil 100% 100% CD Italia Milan, Italy 100% 100% Christian Dior Belgique Brussels, Belgium 100% 100% Bopel Spa Milan, Italy 70% 70% Christian Dior Jakarta, Indonesia 100% 100% J.A. Retail Paris, France 100% 100% EVF Paris, France 100% 100% Carrera Traun (2) Traun, Austria 5% 5% Wines and Spirits Champagne Moët & Chandon SA Epernay, France 43% 28% SA Epernay, France 43% 28% Champagne Ruinart SA Reims, France 43% 28% Champagne Ruinart U.K. Ltd Newhaven, United Kingdom 43% 28% (2) Company consolidated under the equity method

89 PERCENTAGE COMPANIES HEAD OFFICE Control Interest

Wines and Spirits (continued) France Champagne SA Epernay, France 43% 28% De Fresnoy SA Epernay, France 43% 28% Moët Hennessy UK Ltd London, United Kingdom 43% 28% Chandon SA Espagne Sant Cugat, Spain 43% 28% Moët & Chandon SA (Suisse) Geneva, Switzerland 43% 28% Domaine Chandon, Inc. Yountville (California), U.S.A. 43% 28% M Chandon do Brasil Ltda Sao Paulo, Brazil 43% 28% Bodegas Chandon SA Buenos Aires, Argentina 43% 28% Domaine Chandon Australia, Pty Ltd Coldstream Victoria, Australia 43% 28% Champagne Ruinart GmbH Frankfort, Germany 43% 28% Champagne Des Moutiers SA Oiry, France 43% 28% Schieffelin Partner Inc. New York, U.S.A. 43% 28% Moët Hennessy Mexico Mexico, Mexico 43% 28% Moët Hennessy Deutschland GmbH Munich, Germany 43% 28% Moët Hennessy Italia SpA Turin, Italy 43% 28% Schieffelin & Sommerset Inc. New York, U.S.A. 43% 28% Schieffelin & Co Inc. New York, U.S.A. 43% 28% MH UDV France SA Paris, France 43% 28% Deux Rivieres General Partnership (2) Yountville (California), U.S.A. 43% 6% Champagne Pommery & Greno SA Reims, France 43% 28% Chamfipar SA Reims, France 43% 28% Champagne Pommery SA Reims, France 43% 28% Pommery Distribution SA (Suisse) Vevey, Switzerland 43% 28% Pommery GmbH Munich, Germany 43% 28% Pommery Belgium SA Brussels, Belgium 43% 28% Veuve Clicquot Ponsardin SA Reims, France 43% 28% Champagne Canard-Duchêne SA Ludes, France 43% 28% Société Civile des Crus de Champagne Reims, France 43% 28% Neggma SA Reims, France 21% 14% Veuve Clicquot U.K. London, United Kingdom 43% 28% Veuve Clicquot Import GmbH Wiesbaden, Germany 43% 28% Veuve Clicquot Suisse SA Geneva, Switzerland 43% 28% Clicquot Inc. New York, U.S.A. 43% 28% Ltd Margaret River, Australia 43% 28% Veuve Clicquot Properties, Pty Ltd Sydney, Australia 43% 28% Ltd New Zeland 43% 28% Scharffenberger Cellars Inc. Napa Valley (California), U.S.A. 43% 28% Marques Champagne Spiritueux GIE (2) Brussels, Belgium 43% 28% Paragon Vintners Ltd London, United Kingdom 43% 28% Veuve Clicquot do Brasil Ltda Sao Paulo, Brazil 43% 28% Krug SA Reims, France 43% 28% (2) Company consolidated under the equity method

90 PERCENTAGE COMPANIES HEAD OFFICE Control Interest

Wines and Spirits (continued) Veuve Clicquot Japan KK Tokyo, Japan 43% 28% MountAdam Eden Valley, Australia 38% 25% Newton Vineyards U.S.A. 26% 17% Clicquot Asia Ltd Hong Kong 43% 28% Clicquot Hong Kong Ltd Hong Kong 43% 28% Clicquot Singapore (Pte) Ltd Singapore 43% 28% Olivier Supplies (Malaysia) Sd Ampang, Malaysia 43% 28% Olivier Taiwan Ltd Taipei, Taiwan 43% 28% P.T. Protara Boga Indonesia Jakarta, Indonesia 26% 17% Château d’Yquem SA Sauternes, France 43% 27% Château d’Yquem SC Sauternes, France 43% 28% Ja.s Hennessy & Co SA Cognac, France 43% 28% Thomas Hine & Cie SA Jarnac, France 43% 28% DMJ Holdings BV (3) Amsterdam, Netherlands 28% 19% UD Moët Hennessy BV (3) The Hague, Netherlands 43% 28% Hennessy Dublin Ltd Dublin, Ireland 43% 28% Edward Dillon & Co Ltd (2) Dublin, Ireland 14% 9% Hennessy Far East Ltd Hong Kong 43% 28% Riche Monde Orient Limited (3) Hong Kong 32% 21% Riche Monde Hong Kong Ltd (3) Hong Kong 43% 21% Riche Monde () Ltd Hong Kong 43% 21% Moët Hennessy UDG (Far East) Ltd (3) Hong Kong 43% 28% Riche Monde Singapour Pte Ltd (3) Singapore 43% 28% Riche Monde Malaisie Inc. (3) Petaling Jaya, Malaysia 43% 14% Riche Monde Taïpei Ltd (3) Taïpei, Taïwan 43% 21% Riche Monde Bangkok Ltd (3) Bangkok, Thailand 43% 28% Moët Hennessy Korea Ltd Seoul, South Korea 43% 28% Moët Hennessy Shanghai Ltd Shanghai, China 43% 28% Moët Hennessy India pvt. Ltd New Dehli, India 43% 28% Moët Hennessy Taiwan Taiwan 43% 28% Moët Hennessy Netherlands BV Naarden, Netherlands 43% 28% Jardine Wines & Spirits KK (3) Tokyo, Japan 43% 19% Moët Hennessy Asia Pte Ltd Singapore 43% 28% Fashion and Leather Goods Louis Vuitton Malletier SA Paris, France 43% 43% SNC Société des Ateliers Louis Vuitton Paris, France 43% 43% SNC Société Louis Vuitton Services Paris, France 43% 43% SNC Société des Magasins Louis Vuitton - France Paris, France 43% 43% Louis Vuitton Monaco SA Monte Carlo, Monaco 43% 43% (2) Company consolidated under the equity method (3) Joint-venture company with Diageo: consolidation of only the Moët Hennessy activity

91 PERCENTAGE COMPANIES HEAD OFFICE Control Interest

Fashion and Leather Goods (continued) Louis Vuitton U.K. Ltd London, United Kingdom 43% 43% Louis Vuitton Deutschland GmbH Düsseldorf, Germany 43% 43% Louis Vuitton Espana SA Madrid, Spain 43% 43% Catalana Talleres SA Barbera del Valles, Spain 43% 43% Louis Vuitton Netherlands BV Amsterdam, Netherlands 43% 43% Louis Vuitton Belgique SA Brussels, Belgium 43% 43% Louis Vuitton Italia SpA Milan, Italy 43% 43% Lucina Milan, Italy 43% 43% Louis Vuitton Hellas SA Athens, Greece 43% 43% Louis Vuitton Portugal, Maleiro, LdA. Lisbon, Portugal 43% 43% Louis Vuitton Danmark A/S Copenhagen, Denmark 43% 43% Louis Vuitton Suède Stockholm, Sweden 43% 43% Louis Vuitton Suisse SA Geneva, Switzerland 43% 43% Louis Vuitton Ceska s.r.o. Prague, Czech Republic 43% 43% Louis Vuitton GesmbH Vienna, Austria 43% 43% Louis Vuitton Cantacilik Ticaret, Anonim Sirketi Istanbul, Turkey 43% 43% Louis Vuitton US Manufacturing, Inc. San Dimas (California), U.S.A. 43% 43% Louis Vuitton , Inc. (Hawaii), U.S.A. 43% 43% Atlantic Luggage Company, Ltd Hamilton, Bermuda 17% 17% Louis Vuitton Guam, Inc. Agana, Guam 43% 43% Louis Vuitton Saïpan, Inc. Saïpan, NMI 43% 43% San Dimas Luggage Company San Dimas (California), U.S.A. 43% 43% Louis Vuitton Distribuçao Ltda Brasilia, Brazil 43% 43% Louis Vuitton Mexico, SA de CV Mexico, Mexico 43% 43% Louis Vuitton Chili Ltda. Santiago, Chili 43% 43% Louis Vuitton Pacific Ltd Hong Kong 43% 43% Louis Vuitton Hong Kong Ltd Hong Kong 43% 43% Louis Vuitton Singapore Pte Ltd Singapore 43% 43% Louis Vuitton Malaysia Sdn Berhad Inc. Kuala-Lumpur, Malaysia 43% 43% Louis Vuitton Taïwan Ltd Taïpei, Taïwan 43% 38% Louis Vuitton Comete Services Ltd Taïpei, Taïwan 43% 38% Louis Vuitton Australia, Pty Ltd Melbourne, Australia 43% 43% Louis Vuitton New Zealand Ltd Auckland, New Zealand 43% 43% Louis Vuitton Cup New Zealand, Ltd Auckland, New Zealand 43% 43% Louis Vuitton Koweït Kuweit 43% 26% Louis Vuitton UAE Dubai, 43% 28% Louis Vuitton Saoudi Arabia LLC Jeddah, Saudi Arabia 43% 28% Louis Vuitton Korea, Ltd Seoul, South Korea 43% 43% Louis Vuitton Argentine SA Buenos Aires, Argentina 43% 43% Louis Vuitton Colombian Corp. Bogota, Colombia 43% 43% Louis Vuitton Maroc SARL Casablanca, Morocco 43% 43% Louis Vuitton Venezuela SA Caracas, Venezuela 43% 43%

92 PERCENTAGE COMPANIES HEAD OFFICE Control Interest

Fashion and Leather Goods (continued) Louis Vuitton Multimedia Inc. New York, U.S.A. 43% 43% Louis Vuitton Japan KK Tokyo, Japan 43% 42% Louis Vuitton N.A, Inc. New York, U.S.A. 43% 43% Louis Vuitton Canada Inc. Toronto, Canada 43% 43% International LLC New York, U.S.A. 43% 37% Marc Jacobs Inc. New York, U.S.A. 43% 43% Marc Jacobs Trademark LLC New York, U.S.A. 14% 14% Loewe SA Madrid, Spain 43% 43% Fashion Holding SA Madrid, Spain 43% 43% Perfumes Loewe Madrid, Spain 43% 43% Loewe Hermanos SA Madrid, Spain 43% 43% Lopena SA Madrid, Spain 43% 43% Manufacturas Loewe SA Barcelona, Spain 43% 43% SNC Loewe International Paris, France 43% 43% SNC Loewe France Paris, France 43% 43% Loewe Hermanos (U.K) Ltd London, United Kingdom 43% 43% Loewe Saïpan Inc. Saïpan, NMI 43% 43% Loewe Guam, Inc. Agana, Guam 43% 43% Loewe Hawaii, Inc. Honolulu (Hawaii), U.S.A. 43% 43% Loewe Hong Kong Ltd Hong Kong 43% 43% Loewe Japan KK Tokyo, Japan 43% 39% Loewe Fashions (Singapore) Pte Ltd Singapore 43% 43% Loewe Malaysia Sdn berhad Inc. Kuala-Lumpur, Malaysia 43% 43% Loewe Taïwan Ltd Taïpei, Taïwan 43% 38% Loewe Australia, Pty Ltd Sydney, Australia 43% 43% Loewe Deutschland GmbH Germany 43% 43% Serrano Inc. New York, U.S.A. 43% 43% Berluti SA Paris, France 43% 43% Société Distribution Robert Etienne Paris, France 43% 43% Stefanobi SRL Milan, Italy 43% 43% Michael Kors Inc. (2) New York, U.S.A. 15% 15% Céline SA Paris, France 43% 43% Avenue M International SCA Paris, France 43% 43% Enilec Gestion SARL Paris, France 43% 43% Céline Montaigne SA Paris, France 43% 43% Céline Monaco SA Monte Carlo, Monaco 43% 43% Céline Italia SRL Florence, Italy 43% 43% Céline Production SRL Florence, Italy 43% 43% Camoï SpA Rome, Italy 43% 43% Céline Suisse SA Geneva, Switzerland 43% 43% Céline U.K. Ltd London, United Kingdom 43% 43% Céline Inc. New York, U.S.A. 43% 43% (2) Company consolidated under the equity method

93 PERCENTAGE COMPANIES HEAD OFFICE Control Interest

Fashion and Leather Goods (continued) Céline Japon KK Tokyo, Japan 43% 43% Céline Ltd (Hong Kong) Hong Kong 43% 42% Céline Pte Ltd (Singapour) Singapore 43% 43% Céline Guam Inc. Tamaning, Guam 43% 43% Céline Ltd (Saïpan) Saïpan, NMI 43% 43% Céline Australia, Pty Ltd Sydney, Australia 43% 43% Céline Hawaï Inc. Hawaï, U.S.A. 43% 43% Céline Korea Ltd Seoul, South Korea 43% 43% Céline Taïwan Ltd Taïpei, Taïwan 43% 22% Parfums Céline SNC Paris, France 43% 43% Kenzo Paris SA Paris, France 43% 43% Kenzo Homme SA Paris, France 26% 26% Modulo SA Montbazon, France 43% 43% Kami SA Montbazon, France 43% 43% Fleurus Mode GmbH Berlin, Germany 43% 43% Florixelles SA Brussels, Belgium 43% 43% Kenzo KK Japon Tokyo, Japan 43% 43% Kenzo UK. London, United Kingdom 43% 43% Fleurus of America Corp. Wilmington (Delaware), U.S.A. 43% 43% Florimadrid SA Madrid, Spain 43% 43% Kenzo Hommes UK London, United Kingdom 43% 26% Kenzo Japan Tokyo, Japan 43% 28% Givenchy SA Paris, France 43% 43% Gentleman Givenchy SA Paris, France 43% 43% Givenchy Corporation New York, U.S.A. 43% 43% Givenchy Boutique Co Ltd Tokyo, Japan 43% 43% Givenchy Co Ltd Japan 43% 43% Gentleman Givenchy Far East Ltd Hong Kong 43% 43% Givenchy Italie (Mirvat) Rome, Italy 43% 43% Givenchy China – Hong Kong Hong Kong 43% 22% Christian Lacroix SNC Paris, France 43% 43% Gabrielle Studio Inc. New York, U.S.A. 43% 43% Louis Vuitton Prada (1) Amsterdam, Netherlands 43% 43% Fendi International BV (1) Amsterdam, Netherlands 43% 22% Fendi International France SA (1) Paris, France 43% 22% Fendi SA Luxembourg (1) Luxembourg 43% 22% Fendi SRL (1) Rome, Italy 43% 22% Fendissime SRL (1) Rome, Italy 43% 22% Fendi Servizi SRL (1) Rome, Italy 43% 22% Fendi Adele SRL (1) Rome, Italy 43% 22% Fendi Industrie SRL (1) Florence, Italy 43% 22% Fendi Italie SRL (1) Rome, Italy 43% 22% (1) Company consolidated on a proportionate basis

94 PERCENTAGE COMPANIES HEAD OFFICE Control Interest

Fashion and Leather Goods (continued) Fendi UK (1) London, United Kingdom 43% 22% Fendi France SA (1) Paris, France 43% 22% Fendi Japan K.K. (1) Tokyo, Japan 43% 15% Fendi Hawaii, Inc. (1) Honolulu, U.S.A. 43% 11% Fendi Stores (1) New York, U.S.A. 43% 22% Fendi Australia Pty Ltd (1) Sydney, Australia 43% 22% Fendi Guam (1) Tumon, Guam 43% 22% Fendi Saïpan Inc. (1) Saïpan, NMI 43% 22% Fendi (Thailand) Company Ltd (1) Bangkok, Thailand 43% 22% Fendi Asia Pacific Limited (1) Hong Kong 43% 22% Fendi Korea Ltd (1) Seoul, Korea 43% 22% Fendi Taiwan Ltd (1) Taipei, Taiwan 43% 16% Fendi Retail Shops (1) New York, U.S.A. 43% 22% Thomas Pink Holdings Ltd London, United Kingdom 43% 30% Thomas Pink Ltd Edimburg, United Kingdom 43% 30% Thomas Pink BV Rotterdam, Pays- Bas 43% 30% Thomas Pink Inc. Delaware, U.S.A. 43% 30% Thomas Pink Ireland Ltd Dublin, Ireland 43% 30% Thomas Pink Belgium SA Brussels, Belgium 43% 30% Thomas Pink France SAS Paris, France 43% 30% LVMH Fashion Group Services SAS Paris, France 43% 43% Belle Jardinière SA Paris, France 43% 43% Belle Jardinière Immo SAS Paris, France 43% 43% LVMH Fashion (Shanghai) Trading Co, Ltd Hong Kong 43% 43% LVMH Fashion Group Japan Tokyo, Japan 43% 43% LVMH Fashion Group Industria SRL Milan, Italy 43% 43% Pucci Se Florence, Italy 43% 43% Fragrances and Cosmetics Parfums Christian Dior SA Paris, France 43% 43% Iparkos Company Ltd Bangkok, Thailand 21% 21% Parfums Christian Dior Brésil Ltda Sao Paulo, Brazil 43% 42% Parfums Christian Dior Argentine SA Buenos Aires, Argentina 43% 43% Parfums Christian Dior China LLC Shanghai, China 43% 43% Parfums Christian Dior Finlande Helsinki, Finland 43% 43% LVMH PC Recherche Paris, France 43% 43% GIE Parfums et Cosmétiques Information Services - PCIS Paris, France 43% 43% SNC du 33 avenue Hoche Paris, France 43% 43% Parfums Christian Dior (U.K) Ltd London, United Kingdom 43% 43% Parfums Christian Dior Rotterdam, Netherlands 43% 43% (1) Company consolidated on a proportionate basis

95 PERCENTAGE COMPANIES HEAD OFFICE Control Interest

Fragrances and Cosmetics (continued) Iparkos BV Rotterdam, Netherlands 43% 43% Parfums Christian Dior GmbH Düsseldorf, Germany 43% 43% Laboratorios Farlabo SA (2) Madrid, Spain 11% 11% Distribuidora Farlabo SA Madrid, Spain 43% 43% Parfums Christian Dior Brussels, Belgium 43% 43% Parfums Christian Dior SpA Pisa, Italy 43% 43% Parfums Christian Dior Ireland Ltd Dublin, Ireland 43% 43% Diorfil SA Athens, Greece 43% 43% Parfums Christian Dior Zurich, Switzerland 43% 43% Christian Dior Perfumes, Inc. New York, U.S.A. 43% 43% Parfums Christian Dior Canada, Inc. Montreal, Canada 43% 43% Perfumes Christian Dior de Mexico, SA de CV Mexico, Mexico 43% 43% Parfums Christian Dior KK Tokyo, Japan 43% 43% Parfums Christian Dior Singapour Pte Ltd Singapore 43% 43% Inalux SA Luxembourg 43% 43% Parfums Christian Dior Far East Ltd Hong Kong 43% 43% Fa Hua Taïwan Ltd Taïpei, Taiwan 43% 43% Parfums Christian Dior China Co, Ltd Shangaï, China 43% 43% Koluxe Parfums Dior Ltd Seoul, South Korea 43% 32% Parfums Christian Dior Hong Kong Ltd Hong Kong 43% 43% Parfums Christian Dior Malaisie Sdn berhad Inc. Kuala-Lumpur, Malaysia 43% 43% Fa Hua Hong Kong Co, Ltd Hong Kong 43% 43% Pardior de Mexico SA de CV Mexico, Mexico 43% 43% Parfums Christian Dior (Danemark) Copenhagen, Denmark 43% 43% Parfums Christian Dior Australia Pty Ltd Sydney, Australia 43% 43% Parfums Christian Dior A/S (Norvège) Hoevik, Norway 43% 43% Parfums Christian Dior AB Stockholm, Sweden 43% 43% Parfums Christian Dior New Zealand Ltd Auckland, New Zealand 43% 43% Parfums Christian Dior Autriche Gesmbh Vienna, Austria 43% 43% Parfums Christian Lacroix Allemagne Düsseldorf, Germany 43% 43% Cosmetic of France Inc. New York, U.S.A. 43% 43% Guerlain SA Paris, France 43% 43% Guerlain Parfumeur GmbH Wiesbaden, Germany 43% 43% Guerlain GesmbH Vienna, Austria 43% 43% Cofra GesmbH Vienna, Austria 43% 43% Guerlain SA (Belgique) Fleurus, Belgium 43% 43% Guerlain SAE Madrid, Spain 43% 43% Oy Guerlain AB Helsinki, Finlande 43% 43% Guerlain SpA Milan, Italy 43% 43% (2) Company consolidated under the equity method

96 PERCENTAGE COMPANIES HEAD OFFICE Control Interest

Fragrances and Cosmetics (continued) Guerlain Ltd Perivale, United Kingdom 43% 43% Guerlain de Portugal Lda. Lisbon, Portugal 43% 43% Guerlain SA (Suisse) Geneva, Switzerland 43% 43% Guerlain Inc. New York, U.S.A. 43% 43% Guerlain Canada Ltd Montreal, Canada 43% 43% Guerlain De Mexico SA Satelite, Mexico 43% 43% Guerlain Puerto Rico Inc. San Juan, Puerto Rico 43% 43% Guerlain Asia Pacific Ltd (Hong Kong) Hong Kong 43% 43% Guerlain KK Tokyo, Japan 43% 43% Guerlain Taïwan Co Ltd Taïpei, Taïwan 43% 43% Guerlain Oceania Australia Pty Ltd Melbourne, Australia 43% 43% Guerlain South East Asia Singapore Pte Ltd Singapore 43% 43% Guerlain Malaisie SDN Berhad Inc. Kuala-Lumpur, Malaysia 43% 43% Etat Pur SA Paris, France 21% 21% Michael Kors Licences New York, U.S.A. 43% 43% Marc Jacob Licences New York, U.S.A. 43% 43% Kenneth Cole New York, U.S.A. 43% 43% Licence Galliano Paris, France 43% 43% Make Up For Ever SA Paris, France 43% 31% Make Up For Ever UK London, United Kingdom 43% 31% Make Up For Ever LLC New York, U.S.A. 43% 43% Make Up For Ever KK Tokyo, Japan 43% 43% Make Up For Ever Italie Milan, Italy 43% 31% SA Levallois, France 43% 43% Parfums Givenchy Ltd Hersham, United Kingdom 43% 43% Parfums Givenchy GmbH Wiesbaden, Germany 43% 43% Parfums Givenchy Inc. New York, U.S.A. 43% 43% Parfums Givenchy Canada Ltd Toronto, Canada 43% 43% Parfums Givenchy KK Tokyo, Japan 43% 43% Parfums Givenchy SRL Milan, Italy 43% 43% Parfums Givenchy Western Hemisphere Div. Inc. Miami (Florida), U.S.A. 43% 43% Parfums Givenchy Asia Pacific Ltd Singapore 43% 43% Kenzo Parfums France SA Paris, France 43% 43% Kenzo Parfums Italia SRL Milan, Italy 43% 43% Kenzo Parfums USA New York, U.S.A. 43% 43% Laflachère SA Saint Vérand, France 43% 24% La Brosse et Dupont SA Courbevoie, France 43% 24% Lardenois SA Hermes, France 43% 24% Lardenois Portugal SA S. Domingos de Rana, Portugal 43% 24% Mitsie SA Tarare, France 43% 24% Serpe SA Barcelona, Spain 43% 24%

97 PERCENTAGE COMPANIES HEAD OFFICE Control Interest

Fragrances and Cosmetics (continued) Arielux SA Arielux, France 43% 24% SN Celluloïd Selestat, France 43% 24% Vikim SARL (2) Saint Brieuc, France 13% 7% Ladoë SA Ladoë, France 43% 24% LBD Ménage Bethisy Saint Pierre, France 43% 24% LBD Belux Brussels, Belgium 43% 24% SCI Masurel Tourcoing, France 43% 24% SCI Sageda Orange, France 43% 24% LBD Asia Ltd Hong Kong 40% 23% Lamatex SA Cours la Ville, France 34% 20% La Niçoise SA Carros, France 40% 23% AGD Italie SRL Stezzano, Italy 43% 23% Métal & Plastic SA (2) Oyonnax, France 15% 9% Centre formation SARL (2) Saint Vérand, France 43% 24% Etablissements Mancret Père et Fils Grenoble, France 43% 24% Inter-Vion Spolka Akeyjna Warsaw, Poland 22% 12% Europa 28% 16% Bliss New York, U.S.A. 30% 30% Bliss UK United Kingdom 43% 30% Hard Candy LLC , U.S.A. 43% 43% Hard Candy Japan Tokyo, Japan 43% 43% Benefit Cosmetics LLC , U.S.A. 30% 30% Benefit Cosmetics UK London, United Kingdom 43% 30% Benefit Cosmetics Japan Tokyo, Japan 43% 43% Urban Decay Cosmetics LLC Costa Mesa, CA, U.S.A. 43% 43% Urban Decay Cosmetics Japan Tokyo, Japan 43% 43% Fresh Inc. Boston, U.S.A. 28% 28% LVMH New Cosmetic KK Tokyo, Japan 43% 43% LVMH Perfumes and Cosmetics Services LLC New York, U.S.A. 43% 43% LVMH Cosmetics Services KK Tokyo, Japan 43% 43% Watches and Jewelry TAG Heuer International SA Luxembourg 43% 43% TAG Heuer SA Marin, Switzerland 43% 43% LVMH Relojeria & Joyeria Española SA Madrid, Spain 43% 43% LVMH Montres et Joaillerie France SA Paris, France 43% 43% LVMH Watches et Jewellery Italia SpA Milan, Italy 43% 43% TAG Heuer Deutschland GmbH Bad Humburg, Germany 43% 43% Timecrown Ltd Manchester, United Kingdom 43% 43% LVMH Watches et Jewellery UK Ltd Manchester, United Kingdom 43% 43% Ebel Ltd Manchester, United Kingdom 43% 43% Tag Heuer Ltd Manchester, United Kingdom 43% 43% (2) Company consolidated under the equity method

98 PERCENTAGE COMPANIES HEAD OFFICE Control Interest

Watches and Jewelry (continued) LVMH Watches et Jewellery USA Inc. Springfield, New Jersey, U.S.A. 43% 43% Pro Time Service Inc. Springfield, New Jersey, U.S.A. 43% 43% TAG Heuer Canada Ltd Toronto, Canada 43% 43% LVMH Watches et Jewellery Far East Ltd Hong Kong 43% 43% LVMH Watches et Jewellery Singapore Pte Ltd Singapore 43% 43% LVMH Watches et Jewellery Malaysia Sdn Bhd Kuala Lumpur, Malaysia 43% 43% TAG Heuer Asia Ltd Labuan, Malaysia 43% 43% LVMH Watches et Jewellery Capital Pte Ltd Singapore 43% 43% LVMH Watches et Jewellery Japan KK Tokyo, Japan 43% 43% LVMH Watches et Jewellery Australia Pty Ltd Melbourne, Australia 43% 43% LVMH Watches et Jewellery Hong Kong Ltd Hong Kong 43% 43% LVMH Watches et Jewellery Taiwan Ltd Taipei, Taiwan 43% 43% Cortech SA Cornol, Switzerland 43% 43% Miserez SARL Bendorf, France 43% 43% Kohli SA Tramelan, Switzerland 43% 43% LVMH Watches et Jewellery Carribean & Latin America Coral Gables (Florida), U.S.A. 43% 43% ArteLink SRL Fratte di S. Guistina in Colle, Italy 43% 43% Ebel SA La Chaux-de-Fonds, Switzerland 43% 43% Ebel USA Inc. New York, U.S.A. 43% 43% Swisswave Europe SA Villiers-Le-Lac, France 43% 43% Glasnost Edition SA La Chaux-de-Fonds, Switzerland 43% 43% Ebel boutique Crans SA Crans-sur-Sierre, Switzerland 43% 43% SI de l’immeuble rue de la Paix 101 La Chaux-de-Fonds, Switzerland 43% 43% LVMH W&J Germany GmbH Munich, Germany 43% 43% Chaumet International SA Paris, France 43% 43% Chaumet London Ltd London, United Kingdom 43% 43% Chaumet KK Tokyo, Japan 43% 43% Chaumet Horlogerie SA Bienne, Switzerland 43% 43% Chaumet Monte-Carlo SAM Monte-Carlo, Monaco 43% 43% Zenith International SA Le Locle, Switzerland 43% 43% Zenith Time Ltd Middlesex, United Kingdom 43% 43% Guido Descombes SpA Milan, Italy 43% 43% Omas SRL Bologna, Italy 43% 38% De Beers London, United Kingdom 21% 21% Delano Basle, Switzerland 43% 43% Favre Leuba Geneva, Switzerland 43% 43%

99 PERCENTAGE COMPANIES HEAD OFFICE Control Interest

Watches and Jewelry (continued) Les Ateliers Horlogers CD LVMH La Chaux-de-Fonds, Switzerland 43% 43% Fred SA Paris, France 43% 43% SA Paris, France 43% 43% Joaillerie de Monaco SA Monte Carlo, Monaco 43% 43% Fred Genève Geneva, Switzerland 43% 43% Fred Inc. Beverly Hills (California), U.S.A. 43% 43% Fred Londres London, United Kingdom 43% 43% Benedom France SA Paris, France 43% 43% Selective Retailing Sephora SA Paris, France 43% 43% Immo-Parfums SARL Boigny sur Bionne, France 43% 43% Sephora France SA Boigny sur Bionne, France 43% 43% Plus Beau Moins Cher SARL Paris, France 43% 32% Sephora Luxembourg SARL Luxembourg 43% 43% Sephora Espagne SA Madrid, Spain 43% 43% Sephora Italie SpA Milan, Italy 43% 43% Sephora Portugal Lda Lisbon, Portugal 43% 43% Sephora Pologne SPZ00 Warsaw, Poland 43% 43% Sephora Deutschland GmbH Essen, Germany 43% 43% Progen SpA Spinea, (VE), Italy 43% 17% Espansione SRL Spinea, (VE), Italy 43% 43% Sephora UK London, United Kingdom 43% 43% Sofidiv Italie Milan, Italy 43% 43% Sephora Marinopoulos SA Alimos, Greece 21% 21% Beauty Shop Romania SA Bucarest, Romania 43% 21% Spring Time Cosmetics SA Athens, Greece 21% 12% Sephora US LLC. Delaware, U.S.A. 43% 43% Sephora Japon KK Tokyo, Japan 43% 43% Solstice 43% 43% LVMH Selection Distribution Group LLC San Francisco, U.S.A. 43% 43% Magasins de la Samaritaine SA Paris, France 23% 23% DFS Holdings Limited Hamilton, Bermuda 43% 26% DFS Australia Pty. Limited Sydney, Australia 43% 26% DFS Australia Superannuation Pty Ltd Sydney, Australia 43% 26% DFS New Caledonia Sarl New Caledonia 43% 26% DFS Group Limited Hamilton, Bermuda 43% 26% DFS European Logistics Limited Hamilton, Bermuda 43% 26% DFS Credit Systems Limited Hamilton, Bermuda 43% 26% DFS Italy Limited Srl Florence, Italy 43% 26% DFS Northwest Retailing Limited Vancouver, Canada 43% 26% DFS Saïpan Limited Saïpan, NMI 43% 26% Kinkaï Saïpan L.P. Saïpan, NMI 43% 26%

100 PERCENTAGE COMPANIES HEAD OFFICE Control Interest

Selective Retailing (continued) Commonwealth Investment Company, Inc. Northern Mariana Island 41% 25% Duty Free Shoppers Hong Kong Limited Kowloon, Hong Kong 43% 26% DFS Consulting Limited Kowloon, Hong Kong 43% 26% DFS Trading Hong Kong Limited Kowloon, Hong Kong 43% 26% DFS China Partners Limited Kowloon, Hong Kong 43% 26% DFS Palau Limited Koror, Palau 43% 26% DFS New Zealand Limited Auckland, New Zealand 43% 26% DFS Merchandising Limited San Francisco, USA 43% 26% DFS Korea Limited Seoul, South Korea 43% 26% DFS Seoul Limited Seoul, South Korea 43% 26% DFS Japan KK Tokyo, Japan 43% 26% DFS Okinawa KK Japan 43% 26% DFS Palau Limited Koror, Palau 43% 26% DFS Singapore (Pte) Limited Singapore 43% 26% DFS Trading Singapore (Pte) Limited Singapore 43% 26% DFS Venture Singapore (Pte) Limited Singapore 43% 26% DFS Taiwan Limited Taïpei, Taïwan, ROC 43% 26% Bloomburg Ltd Bermuda 43% 26% Tou You Duty Free Shop Co. Ltd ROC 43% 26% Duty Free Shoppers Limited Kowloon, Hong Kong 19% 12% DFS Macau Limited Kowloon, Hong Kong 21% 13% Hong Kong International Boutique Partners Kowloon, Hong Kong 21% 13% DFS Sdn. Bhd. Malaysia 43% 26% Singapore International Boutique Partners Singapore 21% 13% JAL/DFS Duty Free Shoppers KK Chiba, Japan 17% 11% TRS New Zealand Limited Auckland, New Zealand 19% 12% Travel Retail Shops Pte Limited Australia 19% 12% DFS Group L.P. Delaware, U.S.A. 43% 26% JFK Terminal 4 Joint Venture 2001 New York, U.S.A. 34% 0% LAX Duty Free Joint Venture 2000 California 33% 20% Royal Hawaïan Insurance Company Ltd Hawaï, U.S.A. 43% 26% DFS/BP Concessions Inc. Portland (Oregon), U.S.A. 35% 21% DFS / Waters. Dallas (Texas), U.S.A. 29% 18% Hawaï International Boutique Partners Honolulu, Hawaï, U.S.A. 21% 13% TRS Hawaii LLC Honolulu, Hawaï, U.S.A. 19% 12% TRS Saïpan Garapan, Saïpan MP 19% 12% TRS Guam Tumon, Guam 19% 12% DFS Guam LP Guam NA 26% Guam Retail Joint Venture (Disney) Tamuning, Guam 21% 13% DFS Liquor Retailing Limited Delaware, U.S.A. NA 26% Twenty Seven – Twenty Eight Corp. Delaware, U.S.A. NA 26%

101 PERCENTAGE COMPANIES HEAD OFFICE Control Interest

Selective Retailing (continued) Le Bon Marché SA Paris, France 43% 43% SEGEP SA Paris, France 43% 42% Franck & Fils SA Paris, France 43% 43% Balthazar Paris, France 43% 43% LVMH Specialty Retail Concepts LLC San Francisco, U.S.A. 43% 43% Tumon Entertainment LLC Tamuring, Guam 43% 43% Comete Guam Inc. Tamuring, Guam 43% 43% Tumon Games LLC Tamuring, Guam 43% 43% Tumon Aquarium LLC Tamuring, Guam 43% 43% Comete Saïpan Inc. Saïpan NMI 43% 43% Cruise Line Holdings Co Miami (Florida), U.S.A. 43% 43% Starboard Cruise Services Inc. Miami (Florida), U.S.A. 43% 43% Starboard Holding Ltd Miami (Florida), U.S.A. 43% 43% International Cruise Shop Miami (Florida), U.S.A. 43% 43% On-Board Media Inc. Miami (Florida), U.S.A. 43% 43% Boxer Media Inc. Miami (Florida), U.S.A. 43% 43% Cruise Management International Inc. Miami (Florida), U.S.A. 43% 43% Miami Airport Duty-Free Miami (Florida), U.S.A. 28% 28% Fort Lauderdale Partnership Ft Lauderdale (Florida), U.S.A. 32% 32%

Other Activities Société Christian Dior SA Paris, France 100% mère Financière Jean Goujon Paris, France 100% 100% Sadifa Paris, France 100% 100% Groupe Lakenbleker Amsterdam, Netherlands 100% 100% Investir Publications SA Paris, France 43% 42% Investir Télécom SA Paris, France 43% 42% Investir Formation SARL Paris, France 43% 42% Compo Finance SARL Paris, France 43% 42% SID Presse SARL Poitiers, France 43% 42% SID Développement SA Poitiers, France 43% 42% SID Editions SA Paris, France 43% 42% SID Magazine SA Paris, France 43% 42% Cyber Pratic SARL Poitiers, France 43% 42% DI Groupe SA (ex Desfossés International SA) Paris, France 43% 42% DI Services SAS Paris, France 43% 42% Imprimerie Desfossés SA Paris, France 43% 42% Tribune Desfossés SA Paris, France 43% 42% Radio Classique SA Paris, France 43% 42% Editions Classiques Affaires SARL Paris, France 43% 42% System TV SA Boulogne, France 43% 42% Yacast Ltd London, United Kingdom 13% 12%

102 PERCENTAGE COMPANIES HEAD OFFICE Control Interest

Other Activities (continued) DI Regie SAS Paris, France 43% 42% SFPA SARL (Connaissance des Arts) Paris, France 43% 43% D2I SA Paris, France 43% 42% LV & Co SA Paris, France 15% 15% Sephora.com Inc. San Francisco, U.S.A. 43% 43% eluxury.com Inc. (2) San Francisco, U.S.A. 21% 21% PSN Properties Inc. New York, U.S.A. 43% 32% De Pury & Luxembourg Art SA Geneva, Switzerland 43% 32% PSNAL London, United Kingdom 43% 32% JV Bonhams Brooks London, United Kingdom 21% 16% Art & Auction Magazine New York, U.S.A. 43% 43% Sephora.com San Francisco, U.S.A. 43% 43% LVMH Moët Hennessy Louis Vuitton SA Paris, France 43% 43% S.C.I. du 30 de l’avenue Hoche Paris, France 43% 41% Ufipar SA Paris, France 43% 43% L Capital Management SPAS Paris, France 43% 43% Sofidiv SA Paris, France 43% 43% GIE LVMH Services Paris, France 43% 34% Moët Hennessy SA Paris, France 43% 28% LVMH Fashion Group SA Paris, France 43% 43% Ufipress SA Paris, France 43% 43% Delphine SA Paris, France 43% 43% Saint Jacques Finance SA Paris, France 43% 43% LVMH Finance SA Paris, France 43% 43% Eutrope SA Paris, France 43% 43% Flavius SA Paris, France 43% 43% Coriolan SA Paris, France 43% 43% LVMH Art & Auction Group SA Paris, France 43% 43% Compagnie Financière Laflachère SA Paris, France 24% 24% LV Capital SA Paris, France 43% 43% Provital SA Champillon, France 43% 43% Moët Hennessy Inc. New York, U.S.A. 43% 28% LVMH Inc. New York, U.S.A. 43% 43% 598 Madison Leasing Corp New York, U.S.A. 43% 43% LVMH Participations BV Naarden, Netherlands 43% 43% LVMH BV Naarden, Netherlands 43% 43% LVMH KK Tokyo, Japan 43% 43% Shinagawa project KK Tokyo, Japan 43% 43% Osaka Fudosan Company Limited Tokyo, Japan 43% 43% LVMH Asia Pacific Ltd Hong Kong 43% 43% (2) Company consolidated under the equity method

103 REPORT OF THE STATUTORY AUDITORS AT DECEMBER 31, 2001

BARBIER FRINAULT & AUTRES ERNST & YOUNG AUDIT ANDERSEN 41, rue Ybry 4, rue Auber 92576 Neuilly-sur-Seine Cedex 75009 Paris

Statutory Auditors Member of the Compagnie Régionale Member of the Compagnie Régionale de Versailles de Paris

To the Shareholders of the Company Christian Dior, In carrying out the audit assigned to us by your general shareholders’ meeting, we reviewed the consolidated financial statements of the Christian Dior company for the fiscal year ending December 31, 2001 as they appear in this report. The consolidated financial statements were drawn up by the Board of Directors. Our responsibility is to express an opinion on these finan- cial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in France. 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. It 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 financial statements referred to above present fairly, in all material respects, the assets, the financial position and the results of all the companies consolidated into Christian Dior. Furthermore, we have also verified the information relating to the group, in accordance with accounting principles generally accepted in France, which was given in the management report. We have no observation to make as to their sincerity or consistency with the consoli- dated financial statements.

Neuilly-sur-Seine and Paris, April 8, 2002 The Statutory Auditors

BARBIER FRINAULT & AUTRES ERNST & YOUNG AUDIT Gilles Galippe François Hilly

105