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SECURITIES AND
  EXCHANGE COMMISSIONWashington, D.C. 20549



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FORM 20-F


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o
      REGISTRATION STATEMENT
        PURSUANT TO SECTION 12(B) OR (G)OF THE SECURITIES EXCHANGE ACT OF 1934orx
      ANNUAL REPORT
        PURSUANT TO SECTION 13 OR 15(D) OF THESECURITIES EXCHANGE ACT OF 1934for
        the fiscal year ended December 31, 2002oro
      TRANSITION REPORT
        PURSUANT TO SECTION 13 OR 15(D) OF THESECURITIES EXCHANGE
        ACT OF 1934


Commission file no:
  33-18054

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LVMH MOËT
  HENNESSY LOUIS VUITTON(Exact name of Registrant
  as specified in its charter)

The Republic of
  France(Jurisdiction of incorporation
  or organization)

22, avenue Montaigne,
  75008 Paris, France(Address of principal executive offices)

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Securities registered
  or to be registered pursuant to Section 12(b) of the Act:

|Title of each class |  | Name of each exchange on
      which registered
|------------------- |  | -----------------------------------------------
|                    |  |                                                
|None                |  | None                                           

Securities registered
  or to be registered pursuant to Section 12(g) of the Act:Common Shares, par value€(euros) 0.30 per share

Securities for
  which there is a reporting obligation pursuant to Section 15(d)
  of the Act:None

Indicate the number of outstanding
  shares of each of the issuers classes of capital or common
  stock as of the close of the period covered by the annual report:

Common Stock: 489,937,410
  as of December 31, 2002

Indicate by check mark whether
  the registrant: (1) has filed all reports required to be filed
  by Section 13 or 15(d) of the Securities Exchange Act of 1934
  during the preceding 12 months (or for such shorter period that
  the registrant was required to file such reports) and (2) has
  been subject to such filing requirements for the past 90 days.

YesxNo  o

Indicate by check mark which
  financial statement item the registrant has elected to follow:

Item 17  xItem
  18o

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TABLE OF CONTENTS

|                                                                          | Page | 
|------------------------------------------------------------------------- | ---- | 
|                                                                          |      | 
|INTRODUCTION                                                              | 1    | 
|FORWARD-LOOKING
      STATEMENTS                                          | 1    | 
|FINANCIAL
      AND CERTAIN OTHER INFORMATION                             | 1    | 
|PART I                                                                    | 2    | 
|ITEM
      1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS       | 2    | 
|ITEM
      2. OFFER STATISTICS AND EXPECTED TIMETABLE                     | 2    | 
|ITEM
      3. KEY INFORMATION                                             | 2    | 
|SELECTED
      FINANCIAL DATA                                             | 2    | 
|CAPITALIZATION
      AND INDEBTEDNESS                                     | 4    | 
|REASONS
      FOR THE OFFER AND USE OF PROCEEDS                           | 4    | 
|RISK
      FACTORS                                                        | 4    | 
|ITEM
      4. INFORMATION ON THE COMPANY                                  | 6    | 
|HISTORY
      AND DEVELOPMENT OF LVMH                                     | 6    | 
|BUSINESS
      OVERVIEW                                                   | 7    | 
|RISK
      MANAGEMENT POLICY                                              | 33   | 
|ORGANIZATIONAL
      STRUCTURE                                            | 34   | 
|PROPERTY,
      PLANTS AND EQUIPMENT                                      | 36   | 
|ITEM
      5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS                | 39   | 
|OPERATING
      RESULTS                                                   | 39   | 
|LIQUIDITY
      AND CAPITAL RESOURCES                                     | 55   | 
|RESEARCH
      AND DEVELOPMENT                                            | 62   | 
|TREND
      INFORMATION                                                   | 62   | 
|ITEM
      6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                  | 63   | 
|DIRECTORS
      AND SENIOR MANAGEMENT                                     | 63   | 
|COMPENSATION                                                              | 69   | 
|BOARD
      PRACTICES                                                     | 70   | 
|EMPLOYEES                                                                 | 73   | 
|SHARE
      OWNERSHIP                                                     | 77   | 
|ITEM
      7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS           | 79   | 
|MAJOR
      SHAREHOLDERS                                                  | 79   | 
|RELATED
      PARTY TRANSACTIONS                                          | 82   | 
|INTERESTS
      OF EXPERTS AND COUNSEL                                    | 83   | 
|ITEM
      8. FINANCIAL INFORMATION                                       | 83   | 
|CONSOLIDATED
      STATEMENTS AND OTHER FINANCIAL INFORMATION             | 83   | 
|SIGNIFICANT
      CHANGES                                                 | 84   | 
|ITEM
      9. THE OFFER AND LISTING                                       | 85   | 
|OFFER
      AND LISTING DETAILS                                           | 85   | 
|PLAN
      OF DISTRIBUTION                                                | 86   | 
|MARKETS                                                                   | 86   | 
|SELLING
      SHAREHOLDERS                                                | 88   | 
|DILUTION                                                                  | 88   | 
|EXPENSES
      OF THE ISSUE                                               | 88   | 
|ITEM
      10. ADDITIONAL INFORMATION                                     | 88   | 
|SHARE
      CAPITAL                                                       | 88   | 
|MEMORANDUM
      AND ARTICLES OF ASSOCIATION                              | 88   | 
|MATERIAL
      CONTRACTS                                                  | 93   | 
|EXCHANGE
      CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS  | 93   | 
|TAXATION                                                                  | 94   | 
|DIVIDENDS
      AND PAYING AGENTS                                         | 97   | 
|STATEMENT
      BY EXPERTS                                                | 97   | 
|DOCUMENTS
      ON DISPLAY                                                | 97   | 
|SUBSIDIARY
      INFORMATION                                              | 97   | 
|ITEM
      11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 97   | 
|ITEM
      12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES     | 99   | 
|PART II                                                                   | 100  | 
|ITEM
      13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES            | 100  | 

i

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|ITEM
      14.MATERIAL MODIFICATIONS
      TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |     | 
|------------------------------------------------------------------------------------------------ | --- | 
|100                                                                                              |    
|ITEM
      15.CONTROLS AND
      PROCEDURES                                                      | 100 | 
|ITEM
      16. [RESERVED]                                                                        | 100 | 
|PART III                                                                                         | 101 | 
|ITEM
      17.FINANCIAL STATEMENTS                                                               | 101 | 
|ITEM
      18.FINANCIAL
      STATEMENTS                                                         | 101 | 
|ITEM
      19.EXHIBITS                                                                           | 101 | 

ii

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INTRODUCTION

FORWARD-LOOKING
  STATEMENTS

Certain
  information contained in this Annual Report consists of forward-looking
  statements, including statements with respect to managements
  business strategies, objectives, expansion and growth of operations,
  and generally all statements including the words expect(s),
  will, may, believe(s), anticipate(s)
  and similar expressions. Such statements are based on managements
  current views and assumptions and involve known and unknown
  risks and uncertainties that could cause actual results, performance
  or events to differ materially from those in such statement.
  Readers are cautioned not to place undue reliance on these forward-looking
  statements which speak only as of the date hereof. LVMH undertakes
  no obligation to republish revised forward-looking statements
  to reflect events or circumstances after the date hereof or
  to reflect the occurrence of unanticipated events. Readers are
  also urged to carefully review and consider the various disclosures
  made by LVMH which attempt to advise interested parties of the
  factors which affect LVMHs business, including the disclosures
  made under the captions Item 3  Key Information
   Risk Factors, Item 4  Information on
  the Company, Item 5  Operating and Financial
  Review and Prospects and Item 11  Quantitative
  and Qualitative Disclosures About Market Risk in this
  report, as well as LVMHs periodic reports on Forms 20-F
  and 6-K filed with the Securities and Exchange Commission.

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FINANCIAL AND CERTAIN
  OTHER INFORMATION

LVMH
  Moët Hennessy Louis Vuitton is asociété
  anonyme, organized under
  the laws of the Republic of France. As used herein, LVMH
  refers to LVMH Moët Hennessy Louis Vuitton and its subsidiaries,
  unless the context indicates otherwise. LVMHs common stock
  is listed on Euronext Paris. LVMHs American Depositary
  Shares (ADSs) were quoted on the National Association
  of Securities Dealers Automated Quotation System (NASDAQ)
  until the end of trading on October 18, 2002 and were thereafter
  voluntarily delisted.

LVMH
  publishes its consolidated financial statements in euros1.
  In this Annual Report references to euros or EUR
  are to the single European currency adopted by the eleven member
  states of the European Monetary Union, French francs,
  francs or FRF are to the currency of
  the Republic of France (France), and references
  to dollar, $ or USD are
  to United States (United States) currency.

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LVMH
  is incorporated in France. Its principal executive offices are
  located at 22, avenue Montaigne, 75008 Paris (telephone 011-33-1-44-13-22-22).

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For
  the convenience of the reader, this Annual Report contains translations
  of certain French franc or euro amounts into dollars at specified
  rates. Unless otherwise stated, such translations have been
  made at the noon buying rate in New York City for cable transfers
  in French francs and, since January 1, 1999, in euros as certified
  for customs purposes by the Federal Reserve Bank of New York
  (the Noon Buying Rate) on the dates specified. Translations
  among French francs and euros are determined based on the fixed
  rate of the French franc to the euro of FRF 6.55957 to EUR 1.
  For a further discussion of exchange rate information see Item
  3  Key Information  Selected Financial Data
   Exchange Rate Information.

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All
  the LVMH trademarks and trade names mentioned herein have been
  registered by LVMH in France and elsewhere, as appropriate.

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PART I

ITEM 1. IDENTITY OF DIRECTORS,
  SENIOR MANAGEMENT AND ADVISORS

Not
  applicable.

ITEM 2. OFFER STATISTICS AND
  EXPECTED TIMETABLE

Not
  applicable.

ITEM 3. KEY INFORMATION

SELECTED FINANCIAL
  DATA

The
  following selected financial data for each of the last five
  fiscal years are derived from the consolidated financial statements
  of LVMH, which have been audited by Ernst & Young Audit,
  independent auditors.

The
  consolidated financial statements of LVMH are prepared in accordance
  with French accounting principles, as defined by the French
  law of January 3, 1985 and the French regulation 99.02 enacted
  by theComité de
  Réglementation Comptable,
  which differ in certain respects from those generally accepted
  in the United States (United States GAAP). A discussion
  of the principle differences between French accounting principles
  and United States GAAP as they relate to LVMH and a reconciliation
  to United States GAAP of LVMH net income and stockholders
  equity as calculated under French accounting principles is set
  forth in Note 34 of the Notes to the Consolidated Financial
  Statements. (See Item 17  Financial Statements)

The
  data set forth below should be read in conjunction with the
  consolidated financial statements, related notes and other financial
  information herein.

2

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|                                        |             |  | EUR
      (in millions) (except Share and per Share amounts) |   |             | 
|--------------------------------------- | ----------- |  | ------------------------------------------------------------ | - | ----------- | 
|                                        |             |  |                                                              |   |             | 
|                                        |             |  | For
      the year ended December 31                         |   |             | 
|                                        |             |  |                                                              |   |             | 
|                                        | 2002        |  | 2001                                                         |   | 2000        | 
|                                        |             |  |                                                              |   |             | 
|                                        |             |  |                                                              |   |             | 
|INCOME STATEMENT DATA:                  |             |  |                                                              |   |             | 
|Net sales                               | 12,693      |  | 12,229                                                       |   | 11,581      | 
|Income from operations                  | 2,008       |  | 1,560                                                        |   | 1,959       | 
|Income before income taxes              | 1,317       |  | 667                                                          |   | 1,692       | 
|                                        |             |  |                                                              |   |             | 
|                                        |             |  |                                                              |   |             | 
|Net income before amortization
      of |             |  |                                                              |   |             | 
|goodwill and
      unusual items        | 818         |  | 334                                                          |   | 846         | 
|Net income                              | 556         |  | 10                                                           |   | 722         | 
|                                        |             |  |                                                              |   |             | 
|Net income per share(1)(2):             |             |  |                                                              |   |             | 
|Basic earnings                          | 1.14        |  | 0.02                                                         |   | 1.49        | 
|Diluted earnings                        | 1.14        |  | 0.02                                                         |   | 1.49        | 
|                                        |             |  |                                                              |   |             | 
|BALANCE SHEET DATA:                     |             |  |                                                              |   |             | 
|Total assets                            | 21,417      |  | 23,832                                                       |   | 23,192      | 
|Current assets                          | 7,927       |  | 9,552                                                        |   | 10,192      | 
|Net assets                              | 8,842       |  | 8,701                                                        |   | 8,512       | 
|Current liabilities                     | 6,601       |  | 8,026                                                        |   | 9,562       | 
|Long-term debt                          | 4,554       |  | 5,402                                                        |   | 3,498       | 
|Stockholders equity                    | 7,070       |  | 6,901                                                        |   | 7,031       | 
|Common stock                            | 147         |  | 147                                                          |   | 147         | 
|Number of
      common shares and       |             |  |                                                              |   |             | 
|share
      equivalents(2):             |             |  |                                                              |   |             | 
|Basic                                   | 488,852,554 |  | 488,064,659                                                  |   | 484,800,930 | 
|Diluted                                 | 488,852,554 |  | 488,072,374                                                  |   | 484,886,474 | 
|                                        |             |  |                                                              |   |             | 
|Approximate amounts in accordance       |             |  |                                                              |   |             | 
|with United
      States GAAP:          |             |  |                                                              |   |             | 
|Net sales                               | 12,614      |  | 12,152                                                       |   | 11,517      | 
|Income from operations                  | 1,840       |  | (757                                                         | ) | 1,492       | 
|Net income                              | 808         |  | (1,016                                                       | ) | 873         | 
|Net income per share(1)(2):             |             |  |                                                              |   |             | 
|Basic earnings                          | 1.75        |  | (2.22                                                        | ) | 1.90        | 
|Diluted earnings                        | 1.74        |  | (2.22                                                        | ) | 1.90        | 
|Stockholders equity                    | 4,807       |  | 4,075                                                        |   | 5,981       | 
|                                        |             |  |                                                              |   |             | 
|DIVIDENDS PER SHARE(4):                 |             |  |                                                              |   |             | 
|Interim                                 | 0.22        |  | 0.22                                                         |   | 0.22        | 
|Final                                   | 0.58        |  | 0.53                                                         |   | 0.53        | 
|Total                                   | 0.80        |  | 0.75                                                         |   | 0.75        | 

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|(1) | Calculated according
      to the Statement of Financial Accounting Standards No. 128,
      Earnings Per Share which was enacted and implemented
      in 1997.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | 1998 and 1999 figures
      have been adjusted to reflect the bonus share distribution
      of June 1999 (one new Share for ten Shares held on that
      date) and the five-for-one stock split effective as of July
      3, 2000.                                                                                                                                                                                                                                                                                                                                                                                                                       
|(3) | For 1998 financial
      statements and financial data were published and commented
      in French francs. These amounts have been retroactively
      restated from French francs into euros using the exchange
      rate as of January 1, 1999 (EUR 1 = FRF 6.55957). As a result,
      comparative financial statements reflect the same trends
      as would have been presented had LVMH continued to present
      its financial statements in French francs. However, they
      may not be directly comparable to the financial statements
      of companies that have been restated in euro from a currency
      other than the French franc.
|(4) | Dividends per Share
      in U.S. dollars for the five most recent financial years
      are indicated in Item 8  Financial Information
       Consolidated Statements and Other Financial Information
       Dividend Policy.                                                                                                                                                                                                                                                                                                                                                                                                                         

3

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Exchange Rate Information

The
  following table sets forth, for the periods and dates indicated,
  certain information concerning the exchange rate between the
  euro and the dollar for 1998, 1999, 2000, 2001, 2002 and 2003
  through June 16, 2003 based on the Noon Buying Rate. For comparison
  purposes, euro translations of French franc amounts have been
  provided for years prior to 1999, the year in which the euro
  became the single currency of all members of the European Monetary
  Union (including France), using the fixed rate of exchange of
  the French franc to the euro of FRF 6.55957 to EUR 1.00000.
  No representation is made that euro amounts have been, could
  have been or could be converted into dollars at the Noon Buying
  Rate indicated for any given date.

|Year
      Ended December 31,      |  | At
      End of Period |  | Average
      Rate(1) |  | High   |  | Low    | 
|---------------------------------- |  | ---------------------- |  | --------------------- |  | ------ |  | ------ | 
|                                   |  |                        |  |                       |  |        |  |        | 
|Dollar per euro:                   |  |                        |  |                       |  |        |  |        | 
|1998                               |  | 0.8517                 |  | 0.8991                |  | 0.9472 |  | 0.8213 | 
|1999                               |  | 0.9930                 |  | 0.9445                |  | 0.9984 |  | 0.8466 | 
|2000                               |  | 1.0652                 |  | 1.0861                |  | 1.2092 |  | 0.9676 | 
|2001                               |  | 1.1235                 |  | 1.1224                |  | 1.1947 |  | 1.0488 | 
|2002                               |  | 0.9537                 |  | 1.0531                |  | 1.1636 |  | 0.9537 | 
|2003 (through June
      16, 2003) |  | 0.8444                 |  | 0.8504                |  | 0.8557 |  | 0.8425 | 



|Month
      ended |  | At
      end of period |  | Average
      rate(1) |  | High   |  | Low    | 
|----------------- |  | ---------------------- |  | --------------------- |  | ------ |  | ------ | 
|                  |  |                        |  |                       |  |        |  |        | 
|Dollar per euro:  |  |                        |  |                       |  |        |  |        | 
|December 31, 2002 |  | 0.9537                 |  | 0.9810                |  | 1.0074 |  | 0.9537 | 
|January 31, 2003  |  | 0.9312                 |  | 0.9414                |  | 0.9652 |  | 0.9207 | 
|February 28, 2003 |  | 0.9277                 |  | 0.9272                |  | 0.9339 |  | 0.9195 | 
|March 31, 2003    |  | 0.9174                 |  | 0.9261                |  | 0.9483 |  | 0.9040 | 
|April 30, 2003    |  | 0.8945                 |  | 0.9206                |  | 0.9415 |  | 0.8945 | 
|May 31, 2003      |  | 0.8499                 |  | 0.8654                |  | 0.8929 |  | 0.8434 | 
|                  |  |                        |  |                       |  |        |  |        | 

On
  June 16, 2003, the Noon Buying Rate was EUR 0.8444 = $1.0000
  or EUR 1.0000 = $1.1843.

A
  substantial proportion of LVMHs assets, liabilities, revenues
  and expenses are denominated in currencies other than euros.
  Accordingly, fluctuations in the value of these currencies relative
  to other currencies can have a significant effect on the translation
  into euros of such other assets, liabilities, revenues, and
  expenses. For information with respect to the impact of fluctuations
  in exchange rates on LVMHs operations, see Item 11 Quantitative
  and Qualitative Disclosures About Market Risk.

CAPITALIZATION
  AND INDEBTEDNESS

Not applicable.

REASONS FOR THE
  OFFER AND USE OF PROCEEDS

Not applicable.

RISK FACTORS

LVMH brands, expertise and production
  methods may be counterfeited or copied; LVMH products may be
  distributed without its permission, in parallel retail networks.

LVMH
  is known primarily for its brands, unique expertise and specific
  production methods for products sold around the world. LVMHs
  brands are a key element of its business and, as a result, the
  legal protection of its trademarks and brands is an absolute
  necessity for LVMH, especially for the Louis Vuitton brand.
  Thus, brands, product names and trademarks are always filed
  or registered to ensure such protection in France, the United
  States or in any other country. In general, LVMH takes all measures
  at the international level to ensure that such legal protection
  is complete.

4

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LVMH
  products, especially leather goods, are subject to counterfeiting,
  especially in Europe and Southeast Asia. In addition, LVMH perfumes
  and cosmetics may be found in un-controlled retail networks
  (termed parallel retail networks or gray markets)
  inappropriate for the image or nature of LVMH products.

Counterfeiting
  and parallel distribution have an immediate adverse effect on
  LVMHs sales and income and may gradually harm the brand
  image of the products in question. Therefore, LVMH takes every
  measure to fight against these risks.

In
  particular, LVMH has specifically developed an action plan to
  address the counterfeiting of Louis Vuitton products, through
  close cooperation with governmental authorities, customs officials
  and lawyers specializing in these matters in the countries concerned.
  LVMH is also very active in organizations representing the major
  names in the luxury goods industry, in order to promote cooperative
  efforts and a common worldwide message against counterfeiting,
  all of which are essential in successfully combating the problem.

In
  addition, LVMH takes various measures to combat the sale of
  its products through parallel retail networks or gray
  markets by developing product traceability, prohibiting
  direct sales to these networks and taking specific actions aimed
  at better controlling retail channels.

LVMH operates in competitive
  markets

LVMH
  currently operates in markets characterized by an increase in
  the number of products offered. In this competitive environment,
  the positioning of LVMH products is linked to the fame of LVMH
  brands, and to the fact that LVMH products are of high quality
  and often reflect innovative designs and concepts. LVMHs
  positioning in the markets in which it competes is also linked
  to the design or form of its products, their brand image and
  reputation.

Competition
  in the markets in which LVMH operates is also due to the concentration
  of retail networks and the appearance of new players. This is
  true in both the Wines and Spirits and the Perfumes and Cosmetics
  business groups, which are currently facing pressure on margins,
  a profusion of new product launches, and the emergence of retail
  chains. Competition is also present and extremely active in
  the Fashion and Leather Goods business group, where the development
  and constant improvement of LVMH products constitute LVMHs
  primary strengths.

LVMH activities are subject to
  various governmental regulations

In
  France and the other countries in which LVMH operates, many
  of its products are subject to specific regulations. These regulations
  apply to product production and manufacturing conditions as
  well as to sales, consumer safety, product labeling, and composition.

LVMH annual sales are seasonal
  in nature

Nearly
  all of LVMHs activities are seasonal in nature, as illustrated
  by the volume of sales occurring in the last quarter of the
  year and linked to year end festive events. In 2000 and 2002,
  approximately 30% of LVMHs sales occurred in the fourth
  quarter. This figure was less significant in 2001 because of
  the negative effects of theSeptember
  11thattacks in the United States. These tragic events, however,
  confirm that unexpected events in the final months of the year
  may affect LVMHs business volume and earnings.

LVMH is subject to the risks
  and uncertainties related to doing business in several countries

There
  are various types of risks and uncertainties involved in doing
  business in several countries, including: currency fluctuations,
  which can have an impact on operations and customer purchasing
  power, as well as on operating assets located abroad; or economic
  changes that are not necessarily simultaneous from one country
  to another; and, finally, customs regulations or import restrictions
  imposed by some countries which, under certain conditions, may
  penalize LVMH. For a more detailed discussion of these risks
  and the methods used by LVMH to manage them, see Item 11 
  Quantitative and Qualitative Disclosures About Market
  Risk and Item 17  Financial Statements
  Note 29 of the Notes to the Consolidated Financial Statements.

In
  addition, LVMHs activity is balanced over three geographic
  and monetary regions: Asia, the euro zone and the United States.
  This geographic distribution partially offsets the risk of exposure
  to any one area.

****Severe
  Acute Respiratory Syndrome (SARS) struck the East
  Asian and South East Asian regions beginning in early 2003.
  As a result, tourism was severely lower in these regions and
  somewhat lower in other parts of the world. LVMHs management
  expects this decrease in tourism to have an impact primarily
  on DFS operations. LVMH is taking vigorous cost cutting
  measures and expects that tourism may improve significantly
  before the important September-to-December period. However,
  should the impact of SARS continue for longer than currently
  forecast by the relevant experts in the international medical
  community, tourism in certain areas of the world, particularly
  in the South East Asian and East Asian regions, may be affected,
  leading to an adverse effect on those of LVMHs activities linked
  to tourism.

5

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LVMH
  has few operations in countries that limit the repatriation
  of assets or apply strict foreign exchange controls.

ITEM 4. INFORMATION ON THE COMPANY

HISTORY AND DEVELOPMENT
  OF LVMH

LVMH
  Moët Hennessy Louis Vuitton is an international group of
  companies principally engaged in the production and sale of
  prestigious luxury goods under world-famous brand names. LVMH
  came into existence on January 1, 1923 as asociété
  à responsabilité limitée,
  was transformed into asociété anonymeon April 19, 1962 and has existed in its present form since
  1987 through the merger of Moët-Hennessy and Louis Vuitton.
  Headquartered in Paris, LVMH has operations around the world.

LVMH
  is asociété
  anonymeestablished under
  French law until December 31, 2021, unless previously dissolved
  or extended in accordance with its memorandum and articles (statuts).
  LVMH is governed by the French Commercial Code. It is registered
  in theRegistre du Commerce
  et des Sociétésde Parisunder reference number 775 670 417 Paris, Code APE: 741J. LVMHs
  principal and registered office is at 22, avenue Montaigne,
  75008 Paris, France, telephone 011-33-1-44-13-22-22. LVMHs
  agent in the United States for purposes of this annual report
  is LVMH Moët Hennessy Louis Vuitton Inc., located at 19
  East 57thStreet, New York, New York 10022.

The
  following important events have occurred in the development
  of LVMHs business since January 1, 2002:

Wines and Spirits

In
  July 2002 LVMH acquired a 40% interest in Millenium Import LLC,
  a company which markets theBelvédèreandChopinvodka brands in the United States and owns a vodka distillery
  in Poland.

In
  May 2002, LVMH completed the sale of thePommerychampagne brand, administrative and production sites, wine cellars,
  inventories and related distribution agreements to the Vranken
  Monopole group. This transaction did not include thePommeryvineyards.

In
  June 2003, LVMH entered into an agreement with Angostura, a
  French subsidiary of the CL Financial Group, providing for the
  sale to them of LVMHs entire interest in Thomas Hine &
  Co., an LVMH cognac brand.

Fashion and Leather Goods

In
  February 2003, LVMH sold its 36% stake inMichael
  Korsfor 13.9 million U.S.
  dollars and increased its equity investment in Rossimoda, the
  Italian producer of womens shoes for the high end market,
  from 45% to 97% for the amount of EUR 32.5 million.

In the
  first quarter of 2003, LVMH increased its investment inFendito 84% by acquiring shares representing
  17.2% of that companys capital for the amount of EUR 190 million.
  During the course of
  2002, LVMH increased its interest in the Fendigroup from 51% to 67% and its
  interest inThomas Pinkfrom
  70% to 100%.

Perfumes and Cosmetics

In
  December 2002, LVMH sold its interests inHard
  CandyandUrban
  Decay.In May 2003, LVMH sold
  itsMichael Korsfragrance and beauty products business and related license agreement
  to Aramis Inc., a subsidiary of Estee Lauder and signed a contract
  to sell itsMarc JacobsandKenneth Colefragrance and beauty products businesses and related license
  agreements to Coty Inc.

Other Activities

In
  accordance with an agreement dated May 2002, LVMH reduced its
  interest inPhillipsfrom 75% to 27.5%, transferring its controlling interest to
  the companys former managers, Daniella Luxembourg and
  Simon de Pury. In February 2003, LVMH sold its remaining 27.5%
  investment inPhillipsfor a symbolic one U.S. dollar. This operation had no additional
  impact other than the ones already recorded for 2002.

6

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Principal Capital Expenditures

Since
  the end of 2002, LVMH has made no significant capital expenditures.
  Capital expenditures realized during the first quarter of 2003
  mainly relate to renewal of the LVMH retail network and the
  opening of new stores.

In
  2002, LVMH continued to develop its retail network and production
  facilities, LVMH operating investments represented a cash outlay
  of EUR 559 million (including acquisitions of intangible assets
  of EUR 80 million and of tangible assets of EUR 479 million),
  compared with EUR 984 million in 2001 (including acquisition
  of intangible assets of EUR 80 million and of tangible assets
  of EUR 904 million). The 43% decrease from last year reflects
  the fact that non-recurring real estate acquisitions in 2001
  were not renewed, as well as increased selectivity in investments
  and focus on LVMH key brands, starting withLouis
  Vuitton. In 2002, LVMH financed its capital expenditures
  with cash generated from operating activities.

The
  Fashion and Leather business group assumes its own retailing
  on an exclusive basis forLouis
  Vuittonproducts and partially
  for other brands. At the end of 2002, the distribution network
  ofLouis Vuittonincluded 299 exclusive stores. Over the year, the brand increased
  its presence in all regions of the world. Seven new stores were
  opened during the second half, including a global store
  in Kobe (Japan) and an exceptional store on the Omotesando (Tokyo),
  the largest ever opened byLouis
  Vuittonin Japan. The company
  inaugurated its first stores in Israel (Tel Aviv), Russia (Moscow),
  and the Netherlands (Amsterdam), and continued its expansion
  in China. At the same time, the continual renovation (expansion
  and relocation of stores) of the network continued. In 2002,
  forty stores were renovated notably in France, Italy and Japan.

Production
  facilities purchased in 2002 are evenly spread out through all
  LVMH business groups, excluding the Selective Distribution business
  group.

In
  2001, LVMH pursued the development of its distribution network
  and undertook a particular effort to increase the production
  capacity of Louis Vuitton Malletier. New production facilities
  were constructed in Ducey and Saint-Florence, France and in
  Barcelona, Spain. LVMH operating investments resulted in net
  cash outflow of EUR 984 million. These investments represent
  primarily the costs for upgrading the production capacities
  of Louis Vuitton, developing theDFSandLouis Vuittonretail
  networks, and property investments.

In
  2000, LVMH operating investments constituted outlays of EUR
  857 million (including the acquisition of tangible assets of
  EUR 794 million and intangible assets of EUR 63 million). These
  investments were made primarily to develop theDFS,Louis VuittonandSephoraretail
  networks, and to expandLouis
  Vuittons production
  facilities.

BUSINESS OVERVIEW

(1) Wines and Spirits

The
  activities of LVMH in the Wines and Spirits business group are
  divided between two groups: the champagne and wines activities
  and the cognac and spirits activities. LVMHs strategy
  is focused on the premium segments of the global wine and spirits
  market. In 2002, the Wines and Spirits business group posted
  sales of EUR 2,266 million, or 18% of LVMHs net sales.

The
  following table shows consolidated net sales of the Wines and
  Spirits business group by geographical area (in EUR millions),
  as of December 31:

7

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|                          |  | 2002                   |   | 2001                   |   | 2000                   |  
|------------------------- |  | ---------------------- | - | ---------------------- | - | ---------------------- | -
|                          |  |                        |   |                        |   |                        |  
|Country/Area              |  | Percent
      of Sales |   | Percent
      of Sales |   | Percent
      of Sales |  
|                          |  |                        |   |                        |   |                        |  
|France                    |  | 12                     |   | 11                     |   | 10                     |  
|Europe (excluding France) |  | 26                     |   | 24                     |   | 24                     |  
|Americas                  |  | 38                     |   | 38                     |   | 39                     |  
|Japan                     |  | 10                     |   | 12                     |   | 13                     |  
|Asia (excluding Japan)    |  | 12                     |   | 11                     |   | 11                     |  
|Rest of the world         |  | 2                      |   | 4                      |   | 3                      |  
|                          |  |                        |   |                        |   |                        |  
|Total                     |  | 100                    | % | 100                    | % | 100                    | %
|                          |  |                        |   |                        |   |                        |  
|Total (in EUR millions)   |  | 2,266                  |   | 2,232                  |   | 2,336                  |  
|                          |  |                        |   |                        |   |                        |  

(a)  Champagne and Wines

In
  2002, net sales for champagne and wines were EUR 1,411 million
  (91% of which were from champagne sales), representing 11% of
  LVMHs net sales.

(i)
  Champagne and wine brands

LVMH
  produces and sells a broad range of high quality champagne.
  In addition to champagne, LVMH prepares and/or distributes a
  group of premium sparkling and still wines from other well-known
  wine regions (Europe, California, Argentina, Brazil, Australia
  and New Zealand).

LVMH
  holds a leading portfolio of champagne brands, which benefit
  from complementary market positions.Dom
  Pérignonis a prestigious vintage which has been produced
  byMoët & Chandonsince 1936.Moët &
  Chandon(founded in 1743),
  a leading wine grower and exporter of champagne, andVeuve
  Clicquot Ponsardin(founded
  in 1772), which ranks second in the industry, are two premium
  quality internationally-known brands.Mercier(founded in 1858), the
  number one brand sold in France,Canard-Duchêne(founded in 1868) andRuinart(the oldest of the champagne houses, founded in 1729) have a
  development strategy focused primarily on Europe.Krug(founded in 1843 and acquired by LVMH in January 1999) is a
  world famous brand, specializing exclusively in premium vintages.
  ThePommerybrand, owned by LVMH since January 1991, was sold in 2002. Statements
  with respect to the competitive position of LVMH champagne brands
  are based on information (which LVMH believes to be reliable)
  obtained from theComité
  Interprofessionnel des Vins de Champagne(CIVC), an official French organization.

TheChandonbrand
  (created in 1973 in California) includes theMoët
  Hennessywines developed
  in California, Argentina, Australia and Spain by Chandon Estates.
  LVMH also owns a number of prestigious wines coming from the
  New World:Cape MentelleandCloudy Bayproduced in Australia and New Zealand, respectively,Pacific
  EchoandNewtonin California; andMountAdamin Australia which joined LVMH at the end of 2000.

Château
  dYquem, which joined
  LVMH in 1999, is the most prestigious of the Sauternes wines.
  It owes its excellent international reputation to its 110 hectare
  (approximately 272 acres) vineyard located on exceptional soils
  and to the great care taken in its preparation throughout the
  year.

The following table shows total
  champagne and wines sales volume for the past three years:

|          | 2002                           |  | 2001 |  | 2000 | 
|--------- | ------------------------------ |  | ---- |  | ---- | 
|          |                                |  |      |  |      | 
|Product   | (in
      millions of bottles) | 
|Champagne | 53.6                           |  | 49.8 |  | 53.7 | 
|Wine      | 27.0                           |  | 25.3 |  | 27.4 | 

(ii)
  Market share in champagne

LVMH
  is the world leader in champagne. Based on information (which
  LVMH believes to be reliable) obtained from CIVC and on data
  maintained by LVMH with respect to its sales, in 2002 LVMH was
  the leading producer and

8

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exporter of champagne from the Champagne
  region, with 18.4 % of total shipments. The second largest producer,
  Marne et Champagne, represents 34% of the volume of LVMH.

The
  principal champagne markets for LVMH (in millions of bottles,
  which for champagne contain 750 milliliters), the amounts shipped
  by the industry and LVMH in such markets (in millions of bottles)
  and LVMHs percentage market shares thereof are shown in
  the table below.

|                            |          |  | 2002 |  |        |   |          |  | 2001 |  |        |   |          |  | 2000 |  |        |  
|--------------------------- | -------- |  | ---- |  | ------ | - | -------- |  | ---- |  | ------ | - | -------- |  | ---- |  | ------ | -
|                            |          |  |      |  |        |   |          |  |      |  |        |   |          |  |      |  |        |  
|                            |          |  |      |  | LVMH   |   |          |  |      |  | LVMH   |   |          |  |      |  | LVMH   |  
|                            |          |  |      |  | Market |   |          |  |      |  | Market |   |          |  |      |  | Market |  
|Key
      Champagne Markets | Industry |  | LVMH |  | Share  |   | Industry |  | LVMH |  | Share  |   | Industry |  | LVMH |  | Share  |  
|                            |          |  |      |  |        |   |          |  |      |  |        |   |          |  |      |  |        |  
|France                      | 174.9    |  | 13.0 |  | 7.4    | % | 164.4    |  | 13.2 |  | 8      | % | 149.5    |  | 12.0 |  | 8      | %
|United States               | 18.2     |  | 11.2 |  | 61.2   | % | 13.7     |  | 8.5  |  | 62     | % | 19.3     |  | 11.6 |  | 60     | %
|Great Britain               | 31.7     |  | 6.6  |  | 20.8   | % | 25.1     |  | 5.2  |  | 21     | % | 20.4     |  | 5.2  |  | 25     | %
|Germany                     | 11.4     |  | 3.5  |  | 30.9   | % | 12.8     |  | 4.0  |  | 31.5   | % | 14.2     |  | 4.1  |  | 29     | %
|Italy                       | 8.0      |  | 4.3  |  | 53.8   | % | 7.0      |  | 4.1  |  | 58     | % | 8.2      |  | 4.9  |  | 60     | %
|Source: CIVC                |          |  |      |  |        |   |          |  |      |  |        |   |          |  |      |  |        |  

The
  following table shows the geographical breakdown of LVMHs
  champagne sales for the last three years (as a percentage of
  LVMHs total champagne sales, expressed in number of bottles):

|Country           |  | 2002 |   | 2001 |   | 2000 |  
|----------------- |  | ---- | - | ---- | - | ---- | -
|                  |  |      |   |      |   |      |  
|France            |  | 25   |   | 26   |   | 22   |  
|United States     |  | 21   |   | 17   |   | 21   |  
|Great Britain     |  | 12   |   | 10   |   | 10   |  
|Germany           |  | 7    |   | 8    |   | 8    |  
|Italy             |  | 8    |   | 8    |   | 9    |  
|Switzerland       |  | 3    |   | 4    |   | 4    |  
|Japan             |  | 4    |   | 4    |   | 3    |  
|Rest of the world |  | 20   |   | 23   |   | 23   |  
|                  |  |      |   |      |   |      |  
|Total             |  | 100  | % | 100  | % | 100  | %
|                  |  |      |   |      |   |      |  

(iii)
  The champagne production method

The
  name Champagne covers a defined area classified A.O.C. (Appellation
  dorigine contrôlée),
  which covers the 86,832 acres that can be legally used for production.
  In 2002, 76,234 acres were under production. Only three varieties
  of grape are authorized for the production of champagne: chardonnay,
  pinot noir and pinot meunier. The preparation method used for
  wines produced outside such region, using the champagne winemaking
  techniques, is called the méthode
  champenoise.

In
  addition to its effervescence, the primary characteristic of
  champagne is that it is the result of blending wines from different
  years and/or different varieties and harvests. The best brands
  are distinguished by their masterful blend and constant quality
  due to the talent of their wine experts.

Weather
  conditions significantly influence the grape harvest from one
  year to the next. The production of champagne also requires
  aging in cellars for two years or more for the premium
  vintages, which are the vintages sold at more than 110% of the
  average sale price. To protect themselves against crop variations,
  to manage changes in demand and to ensure constant quality over
  the years, the LVMH champagne houses adjust the quantities available
  for sale in order to keep reserve wines in stock. Since poor
  harvests can impact sales for two or three years, or on rare
  occasions, even more, LVMH maintains, at all times, significant
  champagne inventories in its cellars. As of December 31, 2002,
  these inventories represented approximately 216 million bottles,
  the equivalent of 3.8 years of sales.

(iv)
  LVMH supply sources

LVMH
  owns 3,690 acres under production, which provide approximately
  25% of its annual needs. In addition, LVMH purchases grapes
  and wines from growers and cooperatives under multi-year agreements.

9

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Until
  1996, the champagne industry published prices for grapes; to
  these were added specific premiums negotiated individually between
  the growers and the merchants. After the first four-year agreement
  signed in 1996, a new industry agreement was signed between
  the producers and the growers of the Champagne region in the
  spring of 2000 covering the four harvests from 2000 through
  2003 and confirming the desire to limit variations in grape
  prices. This agreement has not prevented the appearance of specific
  premiums, although the base price for grapes from the 2002 harvest
  remained stable at EUR 4.10 as compared to EUR 4.00 for the
  harvests of 2000 and 2001.

Approximately
  ten years ago, growers and producers created a qualitative reserve,
  allowing them to cope with variations in harvests. The surplus
  inventories stockpiled this way can be sold in poor
  harvest years. At the end of 2002, these accumulated surplus
  inventories represented, in total, approximately 50% of a normal
  harvest. These wines held in reserve provide a certain security
  for future years.

(b) Cognac and Spirits

In
  2002, the net sales of cognac and spirits were EUR 855 million,
  or 7% of LVMHs net sales.

LVMH
  holds strong positions in the cognac sector with theHennessybrand.Hennessy, founded
  in 1765, has anextensive product
  line and according to theBureau
  National de lIndustrie du Cognac(BNIC), ranks first among cognac makers.

In
  June 2003, LVMH sold its interest inHinewhich specializes in the rarest qualities of cognac.

LVMH
  sold 42.4 million bottles of cognac in 2002, 40.1 million in
  2001 and 38.0 million in 2000.

(ii)
  Cognac market share

According
  to statistics of BNIC, LVMH is the world leader in cognac, with
  37.7% of non-bulk shipments in 2002, an increase of 0.3 percentage
  point as compared to 2001. Its position is particularly strong
  in the United States and Japan.

The
  following table shows the principal markets for the cognac industry
  and LVMH (in millions of bottles):

|                         |          |  | 2002 |  |        |   |          |  | 2001 |  |        |   |          |  | 2000 |  |        |  
|------------------------ | -------- |  | ---- |  | ------ | - | -------- |  | ---- |  | ------ | - | -------- |  | ---- |  | ------ | -
|                         |          |  |      |  |        |   |          |  |      |  |        |   |          |  |      |  |        |  
|                         |          |  |      |  | LVMH   |   |          |  |      |  | LVMH   |   |          |  |      |  | LVMH   |  
|                         |          |  |      |  | Market |   |          |  |      |  | Market |   |          |  |      |  | Market |  
|Key
      Cognac Markets | Industry |  | LVMH |  | Share  |   | Industry |  | LVMH |  | Share  |   | Industry |  | LVMH |  | Share  |  
|                         |          |  |      |  |        |   |          |  |      |  |        |   |          |  |      |  |        |  
|United States            | 44.1     |  | 22.5 |  | 51.0   | % | 40.1     |  | 20.9 |  | 52.1   | % | 39.0     |  | 20.2 |  | 51.8   | %
|Asia                     |          |  |      |  |        |   |          |  |      |  |        |   |          |  |      |  |        |  
|(excluding
      Japan)  | 16.4     |  | 7.2  |  | 44.1   | % | 15.2     |  | 6.9  |  | 45.1   | % | 17.5     |  | 7.4  |  | 42.2   | %
|Japan                    | 4.6      |  | 2.7  |  | 58.8   | % | 5.3      |  | 3.3  |  | 62.2   | % | 5.8      |  | 3.1  |  | 53.8   | %
|Germany                  | 4.4      |  | 1.2  |  | 27.0   | % | 4.5      |  | 1.0  |  | 22.2   | % | 4.5      |  | 1.3  |  | 28.1   | %
|France                   | 6.4      |  | 0.4  |  | 6.3    | % | 5.3      |  | 0.4  |  | 7.6    | % | 5.5      |  | 0.5  |  | 9.0    | %
|Source: BNIC             |          |  |      |  |        |   |          |  |      |  |        |   |          |  |      |  |        |  

The
  following table shows the geographical breakdown of LVMHs
  cognac sales for the last three years (as a percentage of LVMHs
  total cognac sales, expressed in number of bottles).

|Country                         |  | 2002 |   | 2001 |   | 2000 |  
|------------------------------- |  | ---- | - | ---- | - | ---- | -
|                                |  |      |   |      |   |      |  
|United States                   |  | 53   |   | 53   |   | 51   |  
|Japan                           |  | 6    |   | 7    |   | 9    |  
|Asia (excluding
      Japan)    |  | 17   |   | 17   |   | 17   |  
|Europe (excluding
      France) |  | 19   |   | 18   |   | 18   |  
|Rest of the world               |  | 4    |   | 4    |   | 4    |  
|France                          |  | 1    |   | 1    |   | 1    |  
|                                |  |      |   |      |   |      |  
|Total                           |  | 100  | % | 100  | % | 100  | %
|                                |  |      |   |      |   |      |  

10

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(iii)
  The cognac production method

The
  Cognac region is located around the Charente basin in France.
  The vineyards, which cover nearly 185,250 acres consist almost
  exclusively of white ugni grapes, which produce a wine resulting
  in the best brandies. In 2002, 182,286 acres were under production,
  down 0.7% from 2001.

The
  Cognac region is divided into six areas, each having its own
  particular qualities: Grande Champagne, Petite Champagne, Borderies,
  Fins Bois, Bons Bois and Bois Ordinaires.Hennessyselects
  itseaux-de-viefrom wines produced in the first four, which are more suitable
  to the preparation of its cognacs.

Distillation
  in the Charente region is unique, taking place in two stages,
  a first distillation (première
  chauffe) and a second distillation (seconde
  chauffe). Theeaux-de-vieobtained are aged in oak barrels. Aneau-de-vieat full maturity is not
  yet a good cognac. Cognac results from the gradual blending
  ofeaux-de-vieselected on the basis of vintage, origin and
  age.

(iv)
  LVMH supply sources

Hennessyowns 440 acres. LVMHs vineyard remained stable in 2001
  and 2002, after 148 acres of vineyards were cleared in 1999
  as part of an industry plan implemented in 1998. The objective
  of the plan was to reduce the production area through premiums
  offered for clearing and assistance given to the wine growers
  to encourage them to produce wines other than those used in
  the preparation of cognac.

Most
  of the wines andeaux-de-vieneeded byHennessyfor its production are purchased from a network
  of approximately 2,500 independent producers, with whomHennessyensures the maintenance of exceptional wine quality. Purchase
  prices for wine andeaux-de-vieare established between the company and each producer based
  on market prices. The price of new wines andeaux-de-viehas remained stable since 2000.

With
  sufficient inventories ofeaux-de-vie,
  LVMH copes with price changes by adjusting its purchases from
  year to year.

In
  2002,Hennessycontinued to stabilize its purchase commitments for the years
  harvest, and diversified its relationships with growers in order
  to anticipate its future expansion in the various cognac markets.

(c)
   Wines and spirits distribution

LVMH wines
  and spirits are distributed on the worlds principal markets
  primarily through a network of international
  subsidiaries, some of which are joint ventures with the spirits
  group Diageo. In 2002, 75% of champagne sales and 90% of cognac
  sales were made through this channel.

Beginning
  in 1987, LVMH and Guinness signed agreements leading to the
  creation of 17 joint ventures for the distribution of their
  top brands, includingMH-UDVin France
  andSchieffelin & Somersetin the United States. This joint network strengthens the position
  of the two groups, improves distribution control, enhances customer
  service, and increases profitability by sharing distribution
  costs. This distribution network currently covers the Asia-Pacific
  region, the United States, Mexico, France and Ireland.

Following
  the merger of the Guinness and GrandMet groups in December 1997,
  which led to the birth of the Diageo group, the distribution
  of a certain number of GrandMet brands, particularlySmirnoffvodka andJ&Bwhisky were included, in the activity of several joint ventures,
  notably in the United States, Japan and France. Diageo has a
  34% interest inMoët
  Hennessy. LVMHs interest
  in Diageo (11% on December 31, 1998, reduced to 6.9% in April
  1999, then to 2.9% in June 2000) was sold in 2001.

Veuve
  Clicquotproducts are distributed
  through this distribution network in France, Germany, Switzerland,
  Asia and Latin America, through its own subsidiaries in the
  United Kingdom, Japan, Belgium, and the United States, and through
  independent distributors in the rest of the world.

11

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(d)  2002
  Highlights

Despite
  continued weak economic conditions, the overall performance
  of the Wines and Spirits business group, with
  improvement in all key indicators, was in line with the objectives
  set for 2002. A 7% increase from 2001 in volumes sold confirmed
  the expected recovery.

The
  rebound in champagne consumption continued throughout the year
  in 2002, particularly in the United States, the United Kingdom
  and Japan. Sales volumes were up 14% on a constant structural
  basis (excluding the impact of the sale of thePommerybrand).

As
  a result of the rapid implementation of effective action plans,
  volumes of still and sparkling wines sold in Argentina and Brazil
  grew 6% despite the economic crisis in these countries.

Hennessys
  growth continued, as it again consolidated its market share
  in the premium market segment, supported by a 6% increase in
  sales volumes. The stagnant economic situation in Japan was
  offset by the continued dynamic success ofHennessycognacs in the United States
  and other Asian countries, particularly China.

Moët
  Hennessyand its subsidiaries,
  forming the Wines and Spirits business group of LVMH, actively
  continued to strengthen their distribution network, a priority
  for 2002. In order to generate greater marketing synergies for
  its products in the United States,Moët
  Hennessyconsolidated the
  distribution of its brands and those of Diageo within a single
  distributor in certain key states, such as New York, Florida,
  Texas and California. The sales team assigned exclusively to
  this portfolio will accelerate the development of the brands
  and will ensure a proactive response to the needs of retailers
  and demand from American consumers. In Germany, Switzerland,
  Asia and Latin America, theVeuve
  Clicquotdistribution networks
  were merged with those ofMoët
  & ChandonandHennessy.

To
  enhance its portfolio of premium spirits,Moët
  Hennessyacquired 40% of
  Millennium, the producer of the high-end vodkasBelvédèreandChopin.
  Millennium owns the distribution rights for these brands in
  the United States, a market where they have recorded very strong
  growth, and full ownership of these brands in the rest of the
  world.

(i) Champagne and wines

After
  two difficult years, the champagne markets resumed their growth
  in 2002. The LVMH champagne houses, leaders in their category,
  were the first to benefit from this rebound because of the reputation
  of their brands and the strength of their distribution networks.
  Sales volumes rose by 14% on a constant structural basis (excluding
  the impact of the sale of thePommerybrand), from 2001 to 2002.

The
  2002 harvest in the Champagne region was slightly larger than
  the previous year with a harvest of 4,860 kilograms of champagne-grade
  grapes per acre. Although many French and European wine regions
  suffered from very turbulent weather conditions, the Champagne
  region enjoyed sunny conditions very favorable to maturation,
  a factor that complements efforts to achieve controlled grape
  production. Thus, theChampenoisare expecting a very good vintage. As a precaution, a portion
  of this harvest was set aside in a qualitative reserve to protect
  the local industry from later risks. With their extensive vineyards,
  together with contracts signed with many growers and cooperatives,
  the 2002 harvests ensured a supply in line with sales for LVMHs
  champagne houses.

LVMH
  continued its firm pricing policy, a guarantee of present and
  future quality of its products, the development of its brands,
  and the value of the wines of the Champagne region.

In
  the United States, 2002 was distinguished by the remarkable
  performance of all LVMH brands, the result of a high rate of
  consumption and inventories maintained at normal levels. The
  rebound in this market drove a 33% increase in sales. In the
  United Kingdom, LVMH brands also benefited from the markets
  recovery and ended the year with strong growth. Results for
  the other major champagne importing countries were mixed. In
  Japan, LVMH brands continued to grow, while in Germany the market
  continued to suffer from the slowing economy.

Moët
  & Chandon

Continuing
  to assert its leadership in champagne,Moët
  & Chandonreaped the
  full benefits of the rebound in demand in most of the major
  consuming countries and strong momentum in the emerging markets.
  The brand posted double digit
  growth in sales volumes in 2002. Its inventory position is healthy
  in all markets, suggesting a strong outlook in 2003.

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A
  new presentation was adopted for the Impériale line of
  products and the Millésimes in 2002.

Two
  major campaigns sharply increased the brands global potential
  in late 2002: the launching of a press and display advertising
  campaign in Europe and in the United States, as well as the
  participation in the Louis Vuitton Cup and Americas Cup.

Dom
  Pérignon

Dom
  Pérignons
  appeal, its reputation for excellence and its pursuit of perfection
  generated strong demand, particularly in the United States.
  The 1995 vintage was enthusiastically received. TheOEnothèquewine connoisseur program,
  which offers exclusive access to the brand via a selection of
  rare vintages at the peak of perfection, was also highly successful.

Mercier

Mercierconsolidated its performance and its benchmark status, reporting
  a profitability exceeding that of its very competitive segment.
  The brand continued to expand in the traditional restaurant
  segment through itsLes
  Lieux de Toujoursprogram,
  which it developed with a selection of partner establishments.

Ruinart

The
  oldest champagne house continued to grow, setting an historical
  sales record in the French market and strengthening its position
  in its principal export markets.RuinartBlanc
  de Blancs, the newcuvéeintroduced in 2001, was
  so successful in 2002 that demand could not be met.

Veuve
  Clicquot

In
  2002,Veuve Clicquotposted exceptional growth in sales volumes and net sales, surpassing
  the 1999 records on the eve of the millennium. This performance
  was driven by the quality of its products, innovative marketing,
  special attention paid to customers, and promotional efforts.
  These assets recognized by attentive consumers, combined with
  sustained price levels, contribute toVeuve
  Clicquots position
  as an accessible luxury brand. The house increased
  its communications and promotional investments as compared to
  previous years: press advertising; new products and special
  events like the roll-out of Paint-Box, an exclusive concept
  inspired by the Houses color; the 30th anniversary of
  the prestigious Businesswoman of the Year Award; and the continued
  success, particularly in France and Japan, of the Clicquot Ice
  Box.

Sales
  in key markets, the United States, France, the United Kingdom,
  Italy, and Japan, grew strongly, driven by brisk consumer demand.
  The launching of the Rosé 1996 vintage in September 2002
  enhanced the success of the houses vintages.

Canard-Duchêne

Canard-Duchêneposted a strong performance in 2002, particularly in France,
  where the brand is well established with a strong brand image,
  as well as in England and the French Antilles.

An
  active promotional campaign was initiated in key markets to
  meet more intense competition in 2002. These special events
  were targeted both at the retail market, a preferred channel
  forCanard-Duchêne,
  and at the restaurant sector, where the brand is implementing
  a policy of targeted distribution.

Krug

Despite
  the international economic situation in 2002,Krugposted strong growth, particularly
  in such high-potential markets as the United States, Japan and
  Asia. The year 2002 was highlighted by two events that ensured
  targeted and powerful media coverage forKrug.

The
  new advertising campaign Krug by made its
  first appearance in England, the United States, Japan, and in
  media selected for their international coverage. The second
  highlight was the celebration of forty years of great

13

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winemaking by Henri Krug, the fifth
  generation of a great wine family, in London, New York, Paris,
  Florence, Rome and Tokyo by major designers representing the
  various crafts partnered with Henri Krug.

Chandon
  Estates

Sales
  forChandon Estateswere affected by the economic crisis and currency devaluation
  in Argentina, its largest market. Careful management of the
  product portfolio and the effective implementation of a restructuring
  program reduced the impact of these events on earnings, and
  the year ended with higher sales volumes than 2001.

Sales
  of the Terrazas line of still wines on the international market
  were brisk, as were sales of Chandon California and Chandon
  Australia, with both domains posting their best year since the
  beginning of the millennium.

Finally,
  2002 marked the elaboration of a new strategy for sparkling
  wines and a notable improvement in the performance indicators
  for all brands.

New
  world vintages

Benefiting
  from the arrival on the market of a harvest recognized for both
  size and quality, sales of theSauvignon
  Blanc fromCloudy Bay,
  New Zealands famous vineyard, were exceptionally strong,
  reflecting both its increased global presence and its continuing
  prestige.

Cape
  Mentelleconfirmed its
  status as a great label from Australias Margaret River,
  and was marked by growing success in the United States.

Newton,
  a California vineyard andMountAdam,
  an Australian estate, continued with the consolidation program
  stabilized when they joined LVMH at the beginning of 2001.

Château
  dYquem

In
  2002,Château dYquemcommercially introduced
  a beautiful 1996 vintage which was an instant success, and a
  1997 vintage with great future potential.

In
  2002, after weather conditions made growers fear the worst for
  their harvest,Château
  dYquems grapes
  were literally saved by a dry eastern wind. The growers
  skill and the great care taken to sort the good grapes at the
  right time took care of the rest. LVMH expects 2002 to be a
  good vintage forYquem.

(ii)
  Cognac and spirits

The
  distillation ofeaux-de-viefrom the 2002 harvest rose slightly from that of the 2001 harvest
  and is very close to current yields from the region (at around
  400,000 hectoliters of pure alcohol).

The
  regions inventories of cognac are being drawn down, but
  still do not structurally match demand. Inventories of aged
  cognacs are still too high.Hennessys
  inventories are well suited to the quality mix of
  its shipments.

The
  vineyards from the Cognac region, with around 185,250 acres
  under cultivation, are still too large to provide both cognac
  yields and sufficient revenue per acre for growers. The restructuring
  of the Charente vineyard is proceeding very slowly, and the
  French government, the region and the cognac industry will be
  required to take structural stimulation measures to reduce the
  area covered by the Cognac regions vineyards to appropriate
  levels.

Hennessy

In
  a spirits market that was generally stable in 2002, the premium
  segment continued to enjoy strong growth.Hennessygained market share in this segment thanks to the extremely
  high quality of its products and the fundamental values that
  distinguish its brand and form the cornerstone of its success.

With
  a 6% growth in sales volume,Hennessyconsolidated its position
  as the worlds leader. Against a difficult economic backdrop,
  increased investments in advertising and promotion, among other
  factors, contributed to this performance. The top commercial
  successes were recorded in the United States, Asia and Europe.

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In
  2002,Hennessyintroduced its new Fine de Cognac, in most European countries,
  backed by a major advertising campaign in France and Germany
  late in the year. Elegant and harmonious, this cognac was created
  by the cellar master fromeaux-de-viefrom the four finest vintages of the Cognac region to meet the
  expectations of European consumers. The rapid delivery to distribution
  channels and the initial success with consumers suggest a promising
  future for this cognac. This major initiative should prove to
  be a strong growth driver for LVMH in the future.

Sales
  continued to climb in the United States in a difficult economic
  context, confirming the brands strong presence and its
  appeal to American consumers. While maintaining its leadership
  in the V.S. segment,Hennessysignificantly increased its presence in the V.S.O.P. segment.
  It also launched new initiatives to reach Hispanic consumers.
  This momentum was sustained by the introduction of two new advertising
  campaigns at the end of the year.

Sales
  of the Prestige line, Private Reserve, Paradis Extra and Richard
  Hennessy, continued to expand rapidly in all markets, confirming
  the success of the turnaround effort initiated in 2001 and reinforcingHennessys
  position in this profitable market segment.

The
  strong sales growth in Asia confirmedHennessys
  strategic choices. The sharp growth of sales in China strengthened
  the brands position in a key market crucial to its growth
  in the region. Following Chinas entry in the World Trade
  Organization, sales were particularly high, particularly sales
  for high quality spirits. Moreover, the 2002 reduction in customs
  duties had a beneficial effect onHennessys
  results.

In
  Taiwan, sales were up despite a sharp downturn in the market.
  In other markets like Hong Kong, Malaysia and Singapore,Hennessymaintained its positions. In Japan, in a generally
  sluggish market,Hennessycontinued to dominate the premium segment. Its sales of aged
  grades have expanded sharply, demonstrating the strength of
  the brand, which remains an uncontested benchmark among luxury
  drinks.

Hennessys
  business in Korea and Indochina continued to grow rapidly. The
  brand was extremely successful with younger customers, which
  should ensure future growth.

Sales
  continued to climb steadily in Ireland, a traditional bastion
  for the brand, and the homeland of founder Richard Hennessy.

The
  brand is growing in all European markets, with the success ofHennessyFine
  de Cognac and sales of superior grades (X.O. and the Prestige
  line of products).

In
  Russia and the Commonwealth of Independent States,Hennessys
  sales rose sharply in 2002 across the product lines.

Hine

Throughout
  2002,Hineimplemented
  a strategic and production plan designed to streamline its product
  lines, enhance the brands image and reduce overhead and
  capital employed. The new positioning, enhanced by a new visual
  identity, brought a renewed freshness to the brand that made
  it stand out from its competitors at all levels. The new launch
  in September 2002 was enthusiastically received by distributors,
  and was considered a success by experts and trade publications.

In
  June 2003, LVMH sold its entire interest in Thomas Hine &
  Co. to Angostura, a French subsidiary of the CL Financial Group,
  a Caribbean Group active in the production and distribution
  of various spirits, for a global price of EUR 15 million.

(2)
  Fashion and Leather Goods

Together
  withLouis Vuitton,
  the worlds leading luxury brand, the Fashion and Leather
  Goods business group includes fashion housesGivenchyandChristian Lacroix,
  as well asCéline,Loewe,Berluti,StefanoBi,Kenzo,Marc Jacobs,Fendi,Pucci,Thomas Pink,
  andDonna Karan.
  This exceptional group employs over 15,000 men and women and
  has 20 workshops and 793 stores worldwide. While maintaining
  the identity and the strategy of its brands, the business group
  offers them a powerful infrastructure and shared resources.
  LVMH has implemented a group of synergies that take various
  forms: joint use of territorial structures, implementation of
  back offices and

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shared services, streamlining of
  production equipment and logistics centers and volume savings
  on purchases. This organization allows each brand to allocate
  more resources to its core business: design and marketing strategies
  to establish and enhance its image.

The
  following table shows consolidated net sales for the Fashion
  and Leather Goods business group by geographical area (EUR millions):

|                                |  | 2002           |   | 2001           |   | 2000           |  
|------------------------------- |  | -------------- | - | -------------- | - | -------------- | -
|                                |  |                |   |                |   |                |  
|                                |  | Percent        |   | Percent        |   | Percent        |  
|Country/Area                    |  | of
      Sales |   | of
      Sales |   | of
      Sales |  
|                                |  |                |   |                |   |                |  
|France                          |  | 10             |   | 11             |   | 11             |  
|Europe (excluding
      France) |  | 16             |   | 14             |   | 14             |  
|Americas                        |  | 24             |   | 19             |   | 17             |  
|Japan                           |  | 33             |   | 36             |   | 37             |  
|Asia (excluding
      Japan)    |  | 15             |   | 18             |   | 19             |  
|Rest of the world               |  | 2              |   | 2              |   | 2              |  
|                                |  |                |   |                |   |                |  
|Total                           |  | 100            | % | 100            | % | 100            | %
|                                |  |                |   |                |   |                |  
|Total (in EUR millions)         |  | 4,194          |   | 3,612          |   | 3,202          |  
|                                |  |                |   |                |   |                |  

(a)  The brands of the
  Fashion and Leather Goods business group

In
  the Fashion and Leather Goods business group, LVMH holds a group
  of brands, primarily French, but alsoSpanish,
  Italian, British and American.

Louis
  Vuitton Malletier (founded in 1854), the star brand of this
  business group, first focused its development around the art
  of traveling, creating trunks, rigid or flexible luggage items
  and innovative, practical and elegant bags and accessories,
  before expanding its geographic reach and its expertise into
  other product areas. For over 150 years, its product line has
  continuously expanded with new travel or city models and with
  new materials, shapes and colors. Famous for its originality
  and the high quality of its creations,Louis
  Vuittonis today the world
  leader in luxury goods and, since 1998, has offered its international
  customer a full range of products: leather goods, ready-to-wear
  for men and women, shoes and accessories. In 2002, the brand
  also launched its first watch collection, a new segment in which
  it intends to establish a lasting presence.

The
  principal leather goods lines ofLouis
  Vuittonare:

| | — |  | the
      Monogram line, an historical canvas created in 1896, also
      available inMonogramvernis, mini, satin,
      glace leather and mat leather;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------
| | — |  | the
      Cuir Epi line, offered in seven colors;                                                                                                      
| | — |  | the
      Damier line; and                                                                                                                             
| | — |  | the
      Taïga line for men offered in three colors.                                                                                                  

Loewe,
  the Spanish company created in 1846 and acquired by LVMH in
  1996, originally specialized in high quality leather work. Today
  it is present in leather goods, ready-to-wear and perfumes.

Céline,
  founded in 1945 and owned by LVMH since 1996, is developing
  a ready-to-wear line, leather goods, shoes, accessories and
  perfumes.

Berluti(a bootmaker since 1895)
  designs and markets very high quality mens shoes, both
  custom made and ready-to-wear.

StefanoBi,
  an Italian manufacturer of luxury shoes located in Ferrara since
  1991, was acquired by Louis Vuitton Malletier in 1996.

Marc
  Jacobs, created in New
  York in 1984, is the brand name ofLouis
  Vuittons artistic director. Since 1997, LVMH has owned
  a majority interest inMarc
  Jacobs, which is expanding
  rapidly in fashions for men and women.

Kenzohas rapidly become successful worldwide since its formation
  in 1970, having joined LVMH in 1993. Today, the company operates
  in the areas of ready-to-wear for men and women, fashion accessories,
  leather goods and home furnishings. Its perfume business is
  part of the LVMH Perfumes and Cosmetics business group.

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Givenchy,
  founded in 1952 by Hubert de Givenchy, is a company rooted in
  a tradition of excellence inhaute
  couture, and is also known
  for its collections of men and womens ready-to-wear and
  its fashion accessories. TheGivenchyperfumes are integrated within the LVMH Perfumes and Cosmetics
  business group.

Christian
  Lacroix, created in 1987,
  is one of the newest French fashion houses. Its haute couture
  collections are complemented by two lines of ready-to-wear for
  women and a line of fashion accessories. Its growth is also
  based on licensing agreements signed with the best designers
  notably for perfumes, footwear and tableware.

Thomas
  Pink(formed in 1984) is
  a recognized specialist in high-end shirts in England. Since
  joining LVMH in 1999, the brand has accelerated its international
  growth.

Fendi,
  founded in Rome in 1925, is one of the flagship brands of Italian
  fashion. In July 2000, LVMH acquired an interest inFenditogether
  with the Italian company Prada. In December 2001, LVMH bought
  Pradas interest, increasing its share inFendito 51%. LVMH further increased its share to 84%
  in February 2003. Particularly famous for its expertise and
  designs in furs, the brand is present in the ready-to-wear,
  leather goods and accessories segments.

Emilio
  Pucci, an Italian brand
  founded in 1948, is a symbol of casual fashion in luxury ready-to-wear,
  a synonym of escape and refined leisure.Emilio
  Pucciwas acquired by LVMH
  in February 2000.

Donna
  Karanwas founded in New
  York in 1984, and LVMH has owned 89% of the company since December
  2001. Its ready-to-wear lines, Donna Karan New York, the luxury
  line, and DKNY, a more casual alternative, meet the needs of
  a very modern and international lifestyle.

(b)  LVMH Market Share

In
  the fashion and leather goods sector, LVMH is the undisputed
  world leader because of the number of brands managed;
  net sales; activities ranging fromhaute
  couture, ready-to-wear,
  shoes, leather goods and accessories and; finally, a network
  of directly owned stores. In Japan, theLouis
  Vuittonbrand alone ranks
  first in the leather goods market with a market share of 21%,
  ahead ofGucciwith
  5%, andBurberrys,HermèsandPrada, which
  each hold 3% (Source: Yako Institute and Merrill Lynch estimates).

(c) Design

Whether
  they belong to the world of haute couture or luxury fashion,
  LVMH brands have founded their successprimarily
  on the quality, authenticity and originality of their designs,
  which are renewed with each season and each collection. Thus,
  a strategic priority is to strengthen the creation teams, ensure
  the collaboration of the best designers and adapt their talent
  to the spirit of each brand.

LVMH
  believes that one of its essential assets is its ability to
  attract a large number of internationally recognized designers.Christian Lacroix,
  who celebrated the 15 year anniversary of the creation of his
  house in 2002, was named as artistic director of the ready-to-wear
  and accessory collections ofEmilio
  Pucciin the same year.Marc Jacobshas designed theLouis Vuittonready-to-wear collections since 1998, supervises the creation
  of shoes and is successfully recreating the great classics of
  the brand in leather goods.Michael
  Kors, the well-known American
  designer and founder of his own signature brand in 1981, joinedCélinein 1997. The young designer Julien MacDonald is now the artistic
  director forGivenchys
  haute couture, womens ready-to-wear and accessories. José
  Enrique Ona Selfa presented his first womens ready-to-wear
  collection forLoewein March 2002. Gilles Rosier for women and Christophe Blondin
  for men direct design for theKenzocollections.Donna Karancontinues to create the lines of the company that bears her
  name. Olga Berluti, the heir of the expertise acquired by her
  predecessors, continues the unique style and quality ofBerlutishoes.

(d)  Distribution

Controlling
  the distribution of its products is a core strategic goal for
  LVMH, particularly in the Fashion and Leather
  Goods business group. This control allows LVMH to keep the distribution
  profits, and ensures strict control of the brands images
  and the commercial investment that they require. It also gives
  LVMH closer contacts with its customers so that it can anticipate
  their expectations.

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In
  order to meet these objectives, LVMH created the first international
  network of exclusive boutiques under the banner of its fashion
  and leather goods brands. This network included 793 stores as
  of December 31, 2002, up from 765 at the end of 2001 and 566
  at the end of 2000: as of December 31, 2002, 299 stores were
  exclusive Louis Vuitton boutiques.

(e)  Supply Sources
  and Subcontracting

In
  the Fashion and Leather Goods business group, the manufacturing
  capacities and the use of subcontracting vary significantly,
  depending on the brand.

The
  thirteen manufacturing facilities ofLouis Vuitton, ten in France,
  two in Spain and one in the United States, provide most of the
  brands production.Louis
  Vuittonuses third parties
  only to supplement its manufacturing and achieve production
  flexibility.

The
  optimization of the industrial capacities of Louis Vuitton continued
  in 2002, which achieved a 6% production increase over 2001.
  Three new workshops began operations during the year, in Ducey
  (opening of a workshop after the opening of the temporary shop
  in 2001), in Barbera del Valles, Catalonia (opening of a second
  workshop), and Condé (placed in operation simultaneously
  with the closing of the Issoudun I workshop).

FendiandLoewealso have leather goods workshops but they cover only a portion
  of their production needs. Generally, the subcontracting used
  by the business group is diversified in terms of the number
  of subcontractors and is located primarily in the country of
  origin of the brand, France or Italy, with the exception ofDonna Karanwith most of its subcontractors in Asia.

Worldwide,
  the use of subcontractors for the Fashion and Leather Goods
  business group totaled EUR 354 in 2002, representing 28% of
  the cost of sales.

Louis
  Vuitton Malletier depends on outside suppliers for most of the
  leather and raw materials used in manufacturing its products.
  Even though a significant percentage of its raw materials are
  purchased from a fairly small number of suppliers,Louis
  Vuittonbelieves that these
  supplies could be obtained from other sources. After diversification
  efforts initiated in 1998 towards Norway and Spain, the portfolio
  of LVMH suppliers was expanded to Italy in 2000.

The
  situation forFendiis similar, except for some exotic leathers for which suppliers
  are rare. Finally, for the various companies, the fabric suppliers
  are often Italian, but without any exclusivity. The designers
  and style departments of each company enable manufacturing that
  does not generally depend on patents or exclusive expertise
  owned by third parties.

(f)  2002 Highlights

While
  economic conditions significantly affected the general fashion
  and leather goods market, Louis Vuitton, LVMHs
  star brand and the world leader in luxury goods, again succeeded
  in growing earnings and operating margin.

Despite
  the drop in tourism, particularly in the first half, and the
  bad economic outlook in certain markets, the other brands, which
  are more sensitive to the economic context, generally demonstrated
  their capacity to actively respond and meet the various challenges
  that they faced. In 2002,Donna
  KaranandFendicompleted their restructuring.
  In order to consolidate their newer, high-end strategy, the
  fashion brands of the LVMH Fashion Group have initiated a new
  positioning strategy that will offer greater resistance to economic
  conditions, and will allow them to target investments based
  on profitability and to take full advantage of the economic
  recovery when it occurs

Louis
  Vuitton

Taking
  advantage of very strong demand from its Western and Japanese
  local customers,Louis Vuittonrecorded balanced growth in all geographic regions and again
  gained market share. Its performance was particularly remarkable
  in Japan, where sales grew by 15% in yen, and in North America
  where sales grew by 12% in dollars. During the fourth quarter
  of 2002,Louis Vuittonachieved global growth of 23% on a constant currency basis.
  Illustrating the excitement they generated among customers,
  the newLouis Vuittonproducts contributed 11% to net sales for the year, without
  compromising the growth of traditional products that continue
  to perform.

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The
  new Tambourline
  of watches, a major innovation, sold since mid-September 2002,
  opens up a new promising segment. Available in 60 stores in
  2002, with over 6,500 items sold, over 5,000 more watches have
  been ordered. The Monogram Matcollection, launched in
  July, met with immediate success.Louis
  Vuittonalso created the
  full LV Cup line to celebrate the elimination regattas of the
  Americas Cup, and a collection of Monogram Vernis Fluo
  bags developed with designer Bob Wilson.

At
  the end of 2002, the distribution network ofLouis
  Vuittonincluded 299 exclusive
  stores. Over the year, the brand increased its presence in all
  regions of the world. Seven new stores were opened during the
  second half, including a global store in Kobe (Japan)
  and an exceptional store on the Omotesando (Tokyo), the largest
  ever opened byLouis Vuittonin Japan. The company inaugurated its first stores in Israel
  (Tel Aviv), Russia (Moscow), and the Netherlands (Amsterdam),
  and continued its expansion in China. At the same time, the
  continual renovation (expansion and relocation of stores) of
  the network continued. In 2002, forty stores were renovated
  notably in France, Italy and Japan.

To
  keep up with sales growth,Louis
  Vuittonfurther increased
  its manufacturing capacities, with the opening of a second workshop
  in Barbera del Valles in Spain, and continued the construction
  of a second unit in Ducey on the English Channel. These developments
  in manufacturing were supplemented by the implementation of
  a program to improve distribution logistics that will optimize
  the delivery of LVMHs products worldwide.

In
  March 2003, Monogram Multicolore, a collection of bags and leather
  goods, designed byMarc
  Jacobswith Japanese artist
  Takashi Murakami and backed by a strong advertising campaign,
  appeared in stores with immediate success. Among other new products,Louis Vuittonwill also launch a new line of bags in goat leather, a very
  soft leather highly prized by connoisseurs. Distribution of
  the Tambourwatch
  will be expanded to 60 additional stores.

Early
  this yearLouis Vuittonopened its first store in India, in New Delhi, and is planning
  major new stores in all the regions of the world, specifically
  in Paris, the United States, China and Korea.

Loewe

In
  2002,Loewedemonstrated a certain resistance to weak tourist markets and
  continued its growth in Japan, one of its priority markets.
  The first collections from new designer Jose Enrique Ona Selfa
  were well received. Taking advantage of its Spanish roots and
  its exceptional expertise in working the best leathers, the
  brand is focusing its growth strategy on leather goods and leather
  ready-to-wear items.

Céline

Célines
  image continues to benefit from the design work ofMichael
  Kors. The brand is intensifying its strategy in leather
  goods, a very profitable segment where it continues to grow
  year after year. After the success of its new products in 2002,
  especially the event lines and the Boogiebag,Célinelaunched the Poulbotbag
  and is working on Macadam, a full collection with a very Parisian
  inspiration.

Berluti

Berlutiis one of the leading houses in luxury shoes, both custom made
  and ready-to-wear.Berlutihas posted steady growth, which was particularly
  strong in 2002. The House launched the new Dandy Sauvage line
  during the year, opened a second boutique in London and a store
  in Kobe, Japan.

Kenzo

In
  2002,Kenzos
  activities were affected by the difficulties of the Japanese,
  American and European markets. The creation of the Kenzo Homme
  collections is now under the direction of Christophe Blondin.
  A new store concept was inaugurated in Paris on the Boulevard
  de la Madeleine. This initiative will be followed in 2003 with
  a new brand store presenting theKenzouniverse on four floors at Pont Neuf in Paris, a rapidly growing
  commercial district.

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Givenchy

The
  first collections of Julien MacDonald, who continues to update
  the haute couture and ready-to-wear lines fromGivenchy, were well received in 2002. In a difficult economy,
  the house expanded its activity with European customers, while
  the slowdown in tourism impacted sales related to travel
  retail.

Christian
  Lacroix

Thehaute couturecollections fromChristian
  Lacroixearned excellent press reviews in 2002. The business
  of the company grew in line with its objectives. In particular,
  it successfully continued its expansion in Japan, where it now
  has over twenty stores.

Marc
  Jacobs

The
  company named after Marc Jacobs, the designer of theLouis
  Vuittoncollections, posted
  strong growth on the American market in 2002, driven by the
  considerable success of the Marc by Marc Jacobs line created
  in September 2000. In 2002,Marc
  Jacobswas named designer
  of the year in New York. The brand also confirmed its dynamic
  appeal in Japan, and opened a global store as a
  franchise in Tokyo. The development of a retail network in Asia,
  notably in Hong Kong, has recently been initiated.

Fendi

After
  the successful restructuring of its activities in Italy and
  the purchase of its retail network in Southeast Asia,Fendihas now established, as a result of these intense
  capital investments, a solid basis for its future growth.

The
  house has initiated a strong strategy that capitalizes on its
  aura as a Roman brand, its recognized design, its unique style,
  its emblematic leather products and its unmatched expertise
  in furs. This strategy included reinforcing the quality of its
  retail network (84 stores end of 2002) with a very significant
  renovation program for the next two years.Fendiis also planning to open a free standing store on Tokyos
  Omotesando in 2003.

Thomas
  Pink

This
  emblematic British company combines innovation and quality,
  against a backdrop of the traditional values on which its reputation
  has been built. Specializing primarily in shirts and accessories
  for men, it has recently begun to expand its activity by designing
  collections for women, for whom the new Slim Fit
  shirt has been created.

Pucci

The
  appointment of Christian Lacroix as artistic director forPucciand the presentation of his first collection generated excellent
  press coverage, as well as the very encouraging commercial success
  of the strategy to relaunchPuccis
  famous Florentine house, an icon from the 50s to the 70s.

One
  ofPuccis
  priorities is the development of its retail network. In 2002,
  a flagship store was opened in Paris on the Avenue Montaigne,
  and the company is planning a new store in Saint Tropez in the
  spring of 2003.

Donna
  Karan

Since
  it joined LVMH,Donna Karanhas focused on a profound restructuring of its activities, especially
  in the retail area. Its strategy is now refocused on its core
  activity, theDonna Karancollections and the DKNY line, a more casual alternative. This
  groundwork has established a basis for profitable growth, backed
  by the development of theDonna
  Karanstyle: a modern and
  international life style, symbolized by the city of New York,
  the birthplace of the label and the source of its inspiration.
  The presentation of its collection in February 2003 was unanimously
  well received.

Donna
  Karancontinues to improve
  its American retail network, and is preparing itself to enter
  the Japanese market.

20

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(3)
  Perfumes and Cosmetics

LVMH
  is historically present in the perfumes and cosmetics sector
  through the great French housesChristian
  Dior,Guerlain,GivenchyandKenzo.
  To complete this group of internationally established brands,
  the symbols of timeless luxury, the Perfumes and Cosmetics business
  group acquired in 1999 several innovative cosmetics companies:
  three young American companies,Bliss,BeneFitandFresh,
  that target younger customers, and the French brandMake
  Up For Ever, specializing
  in professional make-up products. In October 2001, LVMH acquired
  a 50% interest in the Italian companyAcqua
  di Parma.

The
  presence of a broad spectrum of brands within the business group
  generates synergies and represents a significant success opportunity.
  The volume effect means that advertising space can be purchased
  at better prices and better locations can be negotiated in department
  stores. In research and development, the group brands have pooled
  their resources since 1997 with a joint center in Saint Jean
  de Braye (France) at theParfums Christian Diorindustrial site. The use of shared services by international
  subsidiaries increases the effectiveness of support functions
  for all brands and facilitates the expansion of the newest brands.
  These economies of scale permit larger investments in design
  and advertising and promotion, the two key factors for success
  in the perfumes and cosmetics sector.

With
  the exception of the products and services of the Laflachère
  group, the LVMH brands are sold in selective retailing circuits
  (as opposed to general retailing and drugstores).

LVMH
  ranks third worldwide in the selective perfume segment, behind
  Shiseido and Estée Lauder, first in Europe, and first
  in France with a market share of 20% (Source: European Forecast
  andSociété
  dEtudes de la Consommation, de la Distribution et de la
  Publicité(Sécodip)).

The
  table below sets forth the breakdown of net sales (as a percentage
  of the net sales of the Perfumes and Cosmetics business group)
  of perfumes, cosmetics and skin care:

|                   | 2002 |  | 2001 |  | 2000 | 
|------------------ | ---- |  | ---- |  | ---- | 
|                   |      |  |      |  |      | 
|Perfumes           | 62   |  | 61   |  | 61   | 
|Make-up            | 21   |  | 22   |  | 21   | 
|Skin care products | 17   |  | 17   |  | 18   | 

The
  following table shows consolidated net sales of the Perfumes
  and Cosmetics business group by geographical area and including
  each areas duty free sales:

|                                | 2002           |   | 2001           |   | 2000           |  
|------------------------------- | -------------- | - | -------------- | - | -------------- | -
|                                |                |   |                |   |                |  
|                                | Percent        |   | Percent        |   | Percent        |  
|Country/Area                    | of
      Sales |   | of
      Sales |   | of
      Sales |  
|                                |                |   |                |   |                |  
|France                          | 20             |   | 20             |   | 20             |  
|Europe (excluding
      France) | 35             |   | 31             |   | 30             |  
|Americas                        | 25             |   | 28             |   | 27             |  
|Japan                           | 7              |   | 7              |   | 9              |  
|Asia (excluding
      Japan)    | 8              |   | 8              |   | 8              |  
|Rest of the world               | 5              |   | 6              |   | 6              |  
|                                |                |   |                |   |                |  
|Total                           | 100            | % | 100            | % | 100            | %
|                                |                |   |                |   |                |  
|Total (in EUR millions)         | 2,336          |   | 2,231          |   | 2,072          |  
|                                |                |   |                |   |                |  

(a)  The brands of the
  Perfumes and Cosmetics business group

The
  companyParfums Christian
  Diorwas born in 1947,
  the same year as the fashion house, with theintroduction
  of the Miss Dior perfume. While developing its lines of perfumes
  for men and women and secondary products over the years,Parfums
  Christian Diorexpanded its activity to the cosmetics sector in
  1955, and to skincare products in 1973. Today,Diorallocates 4% of its sales in cosmetics to research and development
  and is on the cutting edge of the industrys innovations.
  The brand is the leader in France in the selective market for
  perfumes and cosmetics and number five worldwide (Source: European
  Forecast and Sécodip).

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The
  leading LVMH perfumes for women are: Miss Dior, Poison, Dune,
  Dolce Vita, JAdore and Dior Addict. Eau Sauvage, Jules,
  Eau Sauvage Extrême, Fahrenheit, Dune Jour Homme, and
  Higher are the best known fragrances for men.

Diors
  top cosmetics lines are: Capture, Move, Prestige, Snow, Bikinifor skincare products,
  and Dior Addict for make-up.

Guerlain,
  founded in 1828 by Pierre François Pascal Guerlain, has
  created more than 600 perfumes since its inception. The brand
  has an exceptional image in the perfume universe and many of
  its creations have enjoyed remarkable longevity. Today it is
  also known for its make-up and skincare lines.Guerlainhas a network of 24 boutiques dedicated exclusively to the sale
  of its products.

Jicky,
  lHeure Bleue, Mitsouko, Shalimar, Samsara, Aqua Allegoria,
  and Aroma Allegoria for women and Habit Rouge and Vetiver for
  men are the ambassadors for the brand.Guerlains
  leading cosmetics lines areIssimafor skincare products, and Terracota and Divinora for make-up.

Parfums
  Givenchy, founded in 1957,
  completes its presence in the world of fragrances for men and
  women (Amarige, Organza, Eau Torride, Pi, Givenchy pour Homme,
  etc.) with its activity in cosmetics through the Swisscare skincare
  products and the make-up line Miroir launched in 1999.

Parfums
  Kenzoappeared in 1988,
  and recorded strong growth after the success of Flower by Kenzo,
  launched in 2000. In 2001, the company began to diversify its
  activities in the well-being segment by launching
  the Kenzoki line based on plant fluids.

Blissis an American spa and cosmetics company based in New York that
  has posted strong growth since it was formed in 1996. After
  joining LVMH in 1999,Blisshas developed its presence in England and France.

BeneFit
  Cosmetics(created in 1995
  in San Francisco and acquired by LVMH in 1999) owes its rapid
  success to the substantial nature of its beauty and make-up
  products, coupled with a true sense of pleasure, enhanced by
  the playful aspect of the product names and packaging. In addition
  to the sales recorded by its four exclusive boutiques in the
  San Francisco Bay, the brand is currently distributed in more
  than one hundred points of sale in the United States, France,
  and the United Kingdom.

Fresh(created in 1991 and acquired by LVMH in September 2000) initially
  built its reputation on creating body care products inspired
  by ancestral beauty recipes and entirely natural and high quality
  fragrances, before expanding its format to make-up and hair
  care products. The company owns five boutiques in the United
  States.

Make
  Up Forever(created in
  1989) joined LVMH in November 1999. The brand specializes in
  professional make-up and its applications for consumers. Its
  products are distributed in its exclusive boutique in Paris
  and in various selective retailing circuits in France, the United
  States, Canada and Japan.

Urban
  Decay(formed in 1996)
  offers lines of make-up and accessories geared toward teenagers
  and young urban teens.Urban Decayjoined LVMH in February 2000 and has an international presence
  in over twenty countries.

Hard
  Candyjoined LVMH in May
  1999. The Los Angeles-based company, formed in 1995, is designed
  for young customers to whom it offers a full line of make-up
  products in bold colors.

Urban
  DecayandHard
  Candywere sold at the
  end of 2002.

Acqua
  di Parma(founded in 1916
  in Palermo, Italy) is a prestigious perfume brand and symbol
  of Italian style. LVMH acquired 50% ofAcqua di Parmain September 2001. The brand specializes in perfumes and aromatherapy,
  and has diversified its product line range with scents and linens
  for the home. Now based in Milan,Acqua
  di Parmarelies on an exclusive
  retailing network, including a brand store in Milan. Following
  its integration within LVMH, the company is planning a program
  to open stores in the worlds major capitals.

TheLaflachèregroup, whose principal asset is theLa
  BrosseetDupontcompany, is the French leader in hygiene and beauty products.
  It was acquired by LVMH at the end of 1998. It has a strong
  presence in the retail circuits in France and Europe.

22

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(b)  Research in perfumes
  and cosmetics

Research
  plays a major role in the growth strategy of the Perfumes and
  Cosmetics business group. The brands of
  this group now enjoy the advantages provided by combining their
  teams within the LVMH laboratories.

This
  combination is the result of successive events. In 1983, an
  economic interest group (GIE) was formed, which gathered together
  the researchers ofParfums
  Christian Diorand Roc
  (a brand that left LVMH in 1993). In 1997, the teams ofParfums
  Christian Diorwelcomed
  the GIE researchers to the Saint Jean de Braye site. In 1999,
  the research and development teams ofParfums
  GivenchyandGuerlainmerged with those ofParfums
  Christian Diorto form
  the LVMH laboratories in Saint Jean de Braye. Since 2000, these
  laboratories have also placed their expertise in the service
  of the LVMHs American brands. Over 230 scientists, researchers,
  doctors, chemists, biologists and pharmacists now work in Saint
  Jean de Braye on all developments of skincare, make-up and perfume
  products ofChristian Dior,GuerlainandGivenchy.
  The LVMH laboratories also provide product developments services
  for ParfumsKenzoand the young American companies,Bliss,BeneFit,FreshandHard CandyandUrban Decay(until their sale at the end of 2002), and provide regulatory
  coordination for all products.

This
  combination of expertise and concentration of resources offer
  many advantages: they allow LVMH to conduct, together with French
  and foreign partners, particularly European or American universities,
  major applied research projects that benefit all LVMH brands.
  The researchers can also work on areas that would have been
  too costly if they had been focused on a single brand. A larger
  pool of technical innovations that can fuel all the projects
  is available to the marketing teams of the business group. Finally,
  the combination of related services (toxicology, regulations,
  etc.) means that LVMH can provide all the Perfumes and Cosmetics
  brands with a well recognized expertise, especially in the area
  of product safety.

Overall,
  research expenses in the Perfumes and Cosmetics business group
  represent approximately 1.5% of sales, while 61% of those sales
  revenues is earned by the sale of scented products.

In
  2002, the LVMH research teams continued their work in their
  key areas of expertise, sensual appeal, pleasure, product safety
  and performance and their advances in biology, molecular biology
  and natural substances, particularly research in new plant substances.

In
  skincare, the leading research areas are currently anti-aging
  (prevention and correction), the body, and bleaching products
  for Asian customers. In make-up, researchers are focusing on
  the interactions between skin, light and matter, and the new
  polymers.

The
  latest success stories coming from the LVMH laboratories are:
  in skincare products with Bikini (Dior)
  for body slimming, Hydra Move (Dior)
  for hydration, Successlaser (Guerlain)
  and No Surgetics (Parfums Givenchy)
  for wrinkle treatment; and in make-up with the Dior Addict line,
  the Maximeyes mascara and Diorskin foundation forParfums
  Christian Dior, and the
  Divinora line forGuerlain.

(c)  Supply sources
  and subcontracting

The
  five French production centers ofGuerlain,GivenchyandDiorprovide
  all production for the four major French
  brands, includingKenzo,
  both in fragrances, and in the areas of make-up and beauty products.Make Up For Everalso has sufficient manufacturing capacities in France to cover
  its own needs. Only the newer American companies, as well asLoeweperfumes, subcontract most of the manufacturing of their products.

The
  dry materials, such as bottles, stoppers and any other items
  that form the containers or packaging, are acquired from suppliers
  outside of LVMH, as are the raw materials used in the finished
  products. In certain cases, these materials are available only
  from a limited number of French or foreign suppliers.

The
  product formulas are developed primarily in the Saint Jean de
  Braye laboratories, but LVMH can also acquire or develop formulas
  from specialized companies, particularly for perfume essences.

(d) 2002 Highlights

In
  2002, net sales for the Perfumes and Cosmetics business group
  rose 5% in euro (8% on a constant currency basis). The growth
  was particularly remarkable in Asian markets (Japan, Korea and
  China) and in Europe, including

23

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Russia, a market where the significant
  growth confirmed its potential. The problems encountered by
  the department stores in the United States, however, limited
  sales growth in this market.

Loeweperfumes, previously integrated within the Fashion and Leather
  Goods business group, joined Perfumes and Cosmetics in 2002,
  which strengthened its positions in Spain, where the brand is
  a leader in the selective market. In order to focus investments
  on its core and most profitable businesses, LVMH sold the American
  start-up companiesUrban
  DecayandHard
  Candy.

Despite
  strong exposure in the United States, all of the new cosmetics
  companies posted substantial growth in net sales. The American
  brandsBeneFitandFreshand the French companyMake
  Up For Everrecorded double-digit
  growth.

Growth
  in the American licenses more than doubled with the successful
  extension of theMarc Jacobsline and the year-end introduction of the first perfumes from
  designerKenneth Cole.

Parfums
  Christian Dior

Parfums
  Christian Dioragain improved
  its sales performance. This growth is based on its successful
  innovations and on the continued outstanding performance of
  its blue chip brands. Jadore perfume posted a remarkable
  performance, comparable to the year before, confirming its status
  as a best seller and a classic among womens fragrances.

The
  innovative new products of 2002 included the launching of Hydra
  Move skincare products and the body slimming line Bikini. The
  second half of 2002 was marked by the very successful introductions
  of Dior Addict, a womens perfume, Diorskin foundation
  and the Maximeyes eye make-up line.

In
  2002,Parfums Christian
  Diorfocused on its skincare
  products to improve the unity of the product lines, focus its
  offer, and enhance product displays.

In
  2003,Parfums Christian
  Diorwill focus on continued
  expansion in Europe and the high-growth Asian markets in 2003.

As
  in previous years, LVMH expects sales in 2003 to be driven by
  a number of innovations, particularly in skincare and make-up
  products. Early in 2003,Parfums Christian Diorlaunched Capture R60/80, a line of skincare products that
  representing a decisive advance in the fight against aging,
  the culmination of a major project for its laboratories. Dior
  Addict should continue to grow.

Parfums
  Givenchy

Parfums
  Givenchyperformed well,
  with a significant increase in net sales and a particularly
  strong improvement in profitability.

In
  order to intensify visibility and impact,Givenchydeveloped a new presentation, designed in close collaboration
  with the fashion house, and renovated the décor for its
  sales counters in department stores. The two initiatives will
  support the brands international objectives.

The
  year 2002 was highlighted by the successful introduction of
  two new perfumes, Eau Torride for women in the first half of
  2002 and Givenchy pour Homme in September which, in just a few
  months, earned an outstanding sales score in the mens
  category.

For
  2003,Parfums Givenchywill continue to renew its product line, notably with the relaunch
  of LInterdit, its trademark perfume, and the extension
  of the Amarige line. It will also introduce a major new womens
  perfume. The brand also plans to intensify its promotional efforts
  in the make-up segment.

Guerlain

Guerlaindevoted 2002 to the general reorganization of its operations
  and to a strategic refocusing on its historical values of very
  high quality and modernism. This in-depth work is the foundation
  for future growth. The brand posted strong growth in Japan which,
  like France, is one of its priority markets.

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In
  the absence of any major new perfumes in 2002,Guerlainconcentrated on expanding its Issima skincare line with the
  addition of two new products, Success Laser, a powerful wrinkle
  reducer, and Happylogy, a line developed with a brand new approach.

Guerlainhas begun the renovation of its Institut des Champs Elysées
  in Paris and will introduce a major new womens perfume
  in September 2003.

Parfums
  Kenzo

In
  2002,Parfums Kenzomaintained its new momentum and continued to improve income
  from operations. The brand continued to enjoy high sales of
  its Flowerperfume
  and the selective expansion of its Kenzokiline of care products.
  The house also successfully reintroduced its Parfum dEté
  line with newly reformulated componentsessence, bottle,
  packaging and advertising.

Kenzowill introduce a new mens fragrance in 2003.

(4)
  Watches and Jewelry

LVMHs
  newest business group, Watches and Jewelry, created in late
  1999, includesTAG Heuer,EbelandZenith,
  three well-known Swiss watch makers, andChristian
  Dior Watches, also made
  in Switzerland. It also includesChaumetandFred, two of the crown jewels of French jewelry. It now
  includes the joint ventureDe
  Beers LV, created in July
  2001, which opened up its first store in 2002.Omas,
  the famous Italian designer of writing instruments acquired
  in 2000, completes this portfolio and enhances the pen activity
  already initiated byChristian DiorandChaumet.

In
  2002, the Watches and Jewelry business group posted net sales
  of EUR 552 millions, which represents 4% of the net sales of
  LVMH.

|                                |  | 2002           |   | 2001           |   | 2000           |  
|------------------------------- |  | -------------- | - | -------------- | - | -------------- | -
|                                |  |                |   |                |   |                |  
|                                |  | Percent        |   | Percent        |   | Percent        |  
|Country/Area                    |  | of
      Sales |   | of
      Sales |   | of
      Sales |  
|                                |  |                |   |                |   |                |  
|France                          |  | 8              |   | 7              |   | 8              |  
|Europe (excluding
      France) |  | 29             |   | 33             |   | 35             |  
|Americas                        |  | 28             |   | 29             |   | 30             |  
|Japan                           |  | 14             |   | 13             |   | 11             |  
|Asia (excluding
      Japan)    |  | 12             |   | 10             |   | 9              |  
|Rest of the world               |  | 9              |   | 8              |   | 7              |  
|                                |  |                |   |                |   |                |  
|Total                           |  | 100            | % | 100            | % | 100            | %
|                                |  |                |   |                |   |                |  
|Total (in EUR millions)         |  | 552            |   | 548            |   | 614            |  
|                                |  |                |   |                |   |                |  

(a)  The Brands of the
  Watches and Jewelry business group

TAG
  Heuer(founded in 1860
  in Saint-Imier in the Swiss Jura region, acquired by LVMH in
  November 1999) is the uncontested
  benchmark for luxury watches and the world leader in sports
  chronographs. Associated with sports, competition and its values
  of high performance, the brand is famous for the quality and
  precision of its watches, as well as for their cutting-edge
  design. It continued to grow steadily during the last few years,
  and ranked fourth worldwide in luxury watches in 2002 (Source:
  Goldman Sachs research report, March 19, 2003). Its most successful
  models are the 2000, Kirium and Link series in professional
  sport watches, the Carrera, Monaco, Monza, Calibre 36
  models in classic watches and chronographs, and Alter Ego for
  the models designed specifically for women. In 2002,TAG Heuerlaunched TAG Heuer Sportvision, a line of licensed sports eyewear.

Zenith(founded 1865 and established
  in Le Locle in the Swiss Jura region) belongs to the very limited
  circle of watch movement manufacturers. In the watch making
  sector, the term manufacture designates a company
  that provides the design and manufacturing of mechanical movements.
  The two master movements ofZenith, the automatic chronographEl
  Primeroand the automated
  extra-flat movement Elite, absolute benchmarks for Swiss watch
  making, are present in the watches sold under this brand: the
  Chronomaster, Class and Port Royal lines.Zenithjointed LVMH in November 1999, and began to modernize its production
  workshops in 2001.

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Ebel(founded in 1911 in La
  Chaux-de-Fonds, acquired by LVMH in November 1999) is today
  one of the leading luxury watch brands. Its success is founded
  on the alliance of watch making expertise and elegant design
  found in the watches for men and women assembled in its shops,
  particularly the Classic Wave, Beluga, 1911, E-type andJoyaux de lOcéan models.

Christian
  Dior Watches, for which
  LVMH holds an exclusive license, belong to the category of fashion
  watches. They are manufactured in Switzerland by the Ateliers
  Horlogers. The Ateliers Horlogers resulted from the 2001 merger
  of Benedom and PLD, a department ofEbelspecialized in private labels. The collections ofChristian Dior Watches,
  especially the Riva, Chris 47 and Malice lines, in a style designed
  to harmonize perfectly with the creative force of the fashion
  house, are currently experiencing strong growth.

Chaumet,
  a jeweler established in 1780, has maintained its prestigious
  expertise for two centuries, imposing a style that is deliberately
  modern and is reflected in all its designs, whether luxury jewelry
  pieces, or jewelry or watch collections. LVMH acquiredChaumetin November 1999.

Fred
  Paris(founded in 1936)
  is present in high jewelry, jewelry and watch making. In 1995,
  LVMH acquired a 71% interest in the company, which it increased
  to 100% in 1996. Since joining LVMH,Fredhas completely revamped its design, image and distribution.
  This revival can be seen in the bold contemporary style of its
  creations.

Omas,
  the Italian house founded in 1925 and acquired by LVMH in May
  2000, is a manufacturer of luxury pens. Famous for its craftsmanship,
  and for the design and quality of its products,Omascompletes its traditional lines, which are benchmarks in the
  world of writing instruments, with original collections in limited
  series designed for collectors.

De
  Beers LVis a joint venture
  of LVMH andDe Beerscreated in July 2001. The goal of this company, headquartered
  in London, is to establish a global network of boutiques offering
  jewelry under theDe Beersname. It approaches the diamond market from an original angle,
  both in its creative jewelry design and its concept of points
  of sale.

(b)  Organization and
  strategy

Since
  its recent formation within LVMH, the Watches and Jewelry business
  group has worked to lay the foundation
  for profitable growth. It now benefits from the stronger managerial
  expertise and improved positioning and product lines of each
  of the companies and the implementation of appropriate operational
  synergies.

The
  watch making and jewelry houses of LVMH pursue two strategic
  goals, which can penalize net sales in the short term, but will
  drive growth in the future.

The
  first is the implementation of more selective and higher quality
  distribution by establishing closer relations with the best
  specialized retailers. This policy is designed to achieve better
  control of brand images. To complete their presence with these
  carefully selected retailers, theTAG
  Heuer,FredandChaumetbrands also have their own exclusive boutiques, ten forTAG
  Heuer, nine forFred,
  and 18 forChaumet.
  The second strategic goal is the reduction of previous manufacturing
  and retailing activities for non-LVMH brands.

This
  business group has already expanded its international presence,
  strengthened the coordination and pooling of its administrative
  resources, expanded its sales and marketing teams, and begun
  to establish a network of post-sale multi-brand services worldwide
  to improve customer satisfaction. At the end of 2001, LVMH Watches
  and Jewelry reached all European markets, the American continent,
  northern Asia, Japan, and the Asia-Pacific region.

Since
  2001, this segment has implemented industrial coordination through
  the use of shared resources, such as prototype design capacities,
  and by sharing the best methods for preparing investment plans,
  improving productivity and negotiating purchasing terms with
  suppliers.

(c)  Supply sources
  and subcontracting

With
  its four Swiss workshops or manufactures, located in
  Le Locle and in La Chaux de Fonds, LVMH provides almost the
  entire assembly of the watches and chronographs sold under the
  TAG Heuer, Ebel, Zenith, Christian Dior,
  Chaumet and Fred Paris brands. In its watch making
  shop, Zenith also designs and manufactures the mechanical
  movements that made this brand famous.

26



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Because
  of the very high quality requirements, the components assembled
  are obtained from a limited number of suppliers, primarily Swiss,
  with the exception of the leather for the watch bands. In this
  respect, the business group has a certain autonomy, with Artelink
  in Italy, the former metallic watch band division of Morellato
  Sfa acquired byTAG Heuerin 2001, and the company Artekad, which specializes in the manufacture
  of dials at La Chaux de Fonds.

Even
  though LVMH may, in certain cases, use third parties to design
  its models, most of them are designed in its own studios.

(d)  2002 Highlights

In
  2002, LVMH Watches and Jewelry brands posted net sales in line
  with 2001 (up in local currencies), in a difficult
  global luxury watch market. The business group continued to
  withdraw from certain production and distribution operations
  that were handled for third parties.

The
  business group continued to generate synergies between the companies
  and the Ateliers Horlogers. These developments optimized technical
  investments and operational efficiency. The birth ofLouis
  Vuittons Tambour
  collection in the Ateliers Horlogers is one example of the success
  of this strategy.

The
  creativity promoted in all the brands was reflected in the launch
  of very innovative products in line with the positioning defined
  for each brand.

In
  an intensely competitive market, the goal of the Watches and
  Jewelry business group is to become a major player in this segment
  that is still new for LVMH, while continuing to sustain its
  growth through carefully targeted capital and marketing expenditures.
  The brands and distribution networks will strive to boost productivity
  at the same time.

TAG
  Heuer

Following
  the refocusing carried out in 2001 to improve distribution selectivity
  and achieve better image control,TAG
  Heuerreturned to growth in 2002 as a world leader in
  luxury watches and sport chronographs. Significant gains in
  market share in the United States, Asia excluding Japan, Italy
  and Eastern Europe confirm the relevance of the strategic decisions
  made sinceTAG Heuerjoined LVMH. In addition, the brand successfully opened its
  first stores in China and in India in 2002.

While
  reaping the benefits of the growth in its core line, which includes
  2000 Exclusive and the celebrated Kirium F1 introduced in 2001,TAG Heuerdemonstrated its ability to innovate and move toward luxury
  products.

The
  brands innovation earned it the 2002 Geneva Watch making
  Grand Prix, in the design category, for the Micrograph F1, which
  measures time to one-thousandth of a second. The sale of this
  product will be launched in 2003. The year 2002 marked the rollout
  of Aquagraph, an automatic diving chronograph with a performance
  confirmed at a depth of 500 meters.

TAG
  Heuerachieved a spectacular
  move upscale that also benefited its Monza, Monacoand Carreraclassic
  models and others, in gold models with prestigious movements
  like the Calibre 36, developed with Zenith Manufacture.

TAG
  Heuercontinued its partnership
  with the sports world as the official timekeeper of the Formula
  1 championship and the world alpine ski championship. In 2002,
  the brand was also highlighted with its partnership with the
  Oracle sailboat in theLouis
  VuittonCup.

Continuing
  its policy of exclusive boutiques in major international cities,TAG Heueropened its sixth sales outlet and first American showroom in
  the heart of New Yorks Soho neighborhood in March 2002,
  following openings in Tokyo, Kuala Lumpur, Singapore, Sydney
  and London. Two showrooms were also opened in Bangkok and Beijing
  in October 2002.

Within
  its selective retail network,TAG
  Heuercontinued its intense
  efforts to install corners and display cases that
  improve the presentation of its product lines.

27



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Christian
  Dior Watches

The
  momentum created by the new strategy ofChristian
  Dior Watchesin 2001 intensified
  in 2002, generating even greater growth for the brand. Despite
  a difficult economic situation for fashion watches, all the
  lines in all countries contributed to the strong performance.

The
  reasons for this rapid expansion reside in the creative design
  and the high quality of the Swiss watches manufactured in LVMHs
  workshops in very close collaboration with theChristian
  Dior Couturedesign studios.
  The style of the watches, the materials used in the bands, and
  the colors of the dials are designed to harmonize with the fashion
  collections.

The
  brand had significant advertising support in its priority markets
  with a campaign focused on the Riva Sparkling watch, a steel
  model with a very unique diamond setting designed by John Galliano,
  the designer for the Christian Dior collections.

A
  new interpretation of the Chris 47 watch, created by John Galliano,
  was unveiled at the Basle trade show in April 2003. The fall
  season will see the roll-out of another womens line designed
  by Victoire de Castellane,Diors
  top jewelry designer.

The
  brands development will be supported by a number of advertising
  visuals for the Rivaand
  Chris 47 watches, and by the installation of a new generation
  of corners and display cases.

Zenith

SinceZenithwas acquired by LVMH in 1999, the watchmaker, famous for its
  Elite and El Primero movements, has continued its repositioning
  and modernization.

In
  2002,Zenithredesigned most of its product line, making many esthetic and
  functional improvements, while remaining faithful to the companys
  classic style. More upscale products, the introduction of new
  movements from the El Primero and Elite foundations, the use
  of precious metals and very limited and large-size original
  designs strongly increased the visibility of the brand in the
  world of fine watch making.

As
  a result of the improvements made to its products,Zeniths
  revenues rose in 2002 with a sharp increase in its average sale
  price. Revenue growth was especially rapid in Asia.

In
  2003, investments in the manufacturing plant will be continued
  in order to increase capacities and develop movements for theZenithbrand and for other LVMH companies such asLouis
  VuittonandTAG
  Heuer.

Major
  innovations and original complications, faithful to the spirit
  ofZenithManufacture, were unveiled at the Basle trade show in April.

Ebel

After
  refocusing its collections in 2001,Ebeldeployed its unique creativity in 2002, illustrating both the
  excellence of its watch making expertise and the elegance of
  its design. One of the years major events was the introduction
  of a high-end jeweled watch collection, Les Joyaux de lOcéan,
  whose commercial success exceeded forecasts. Some of the designs
  in this collection have been chosen to develop steel versions
  at more affordable prices.

Ebelrecorded its best sales growth in Asia, Japan, the Middle East,
  and the United Kingdom.

In
  2003,Ebelwill launch a number of long-awaited innovations. The Tarawa
  watch, from the Joyaux de lOcéan line, will make
  its appearance in steel. Large chronographs, with a unique square
  shape, will enhance the1911line. A mini model in the Classic Wave line, tailored
  to the taste of Asian customers will be unveiled.

Chaumet

In
  2002,Chaumetposted sharp growth in sales in its network of shops located
  primarily in France, Japan and Korea. This very encouraging
  performance was the first result of the strategic refocusing
  conducted in 2001, backed by the resumption of a very targeted
  communications program and the roll-out of a few new products
  such as the

28



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Liens ring.Chaumetopened two new boutiques in September 2002 in Tokyo, one in
  the Ginza district, the other one in the Omotesando district,
  inaugurating a new concept designed by the architect Jean-Michel
  Wilmotte. In March 2003,Chaumetunveiled a new Luxury Jewelry collectionFrisson, an initiative
  crucial for its reputation as a famous jeweler in Place Vendôme.
  In order to enhance its collection,Chaumetalso presented two new timepieces at the 2003 Basle trade show.
  The new architectural concept of theChaumetboutiques will be gradually expanded to the entire network including
  the Place Vendôme boutique in Paris. In May 2003,Chaumetentered into a joint venture with its Korean agent.Chaumets
  future projects include, a new store in Geneva, and several
  boutiques in Japan.

Fred
  Paris

Fred
  Parisposted considerable
  growth in its sales in 2002, despite the closing of a store
  in Houston in the United States. This advance is due primarily
  to the brands continued expansion in Japan and the success
  of its new watch line Move One. The Success and Mouvementée
  lines of rings confirmed their status as the brands best
  sellers.

Omas

In
  2002, this company, based in Bologna, Italy, modernized its
  workshops and revamped its product lines. It focused its sales
  efforts on Italy, the United States and France, the leading
  markets for writing instruments. Two original creations were
  unveiled during the year. One was the limited Atlantide series
  and the other the Ingegno Scrittorio, in solid gold or silver,
  designed in honor of Leonardo da Vinci.

In
  2003, the legendary lines 360 and Arte Italiano will be enriched
  with new versions, particularly the development of a highly-awaited
  line of cartridge pens and the introduction of a new colorVenetian
  blue. A corner format
  developed to highlight theOmasproduct offer will be installed in the best retail outlets.

De
  Beers LV

The
  joint venture formed by LVMH and diamond groupDe
  Beersopened its first
  shop on November 21, 2002 in London, at the corner of Piccadilly
  and Old Bond Street. With a creative approach heavily inspired
  by its Anglo-African origins, the brand made a remarkable entrance
  in the jewelry market. The first piece, a rainfall
  necklace, was auctioned by the actress Sharon Stone for the
  benefit of AIDS charities. The highly luminous store concept
  enhances the purity and brilliance of the diamonds used in the
  most unique creations.

In
  2003,De Beerswill open several retail outlets in various department stores
  in Japan. Other new stores are in the planning stages and will
  open in 2004.

(5)
  Selective Retailing

The
  purpose of the Selective Retailing business group is to create
  a sales environment that promotes the image and status of luxury
  brands. LVMHs selective retailing operations are located
  in Europe, the United States and Asia where they are present
  in two segments: travel retail (the sale of luxury products
  to international travelers), which is the business ofDFSandMiami Cruiseline;
  and the specialized selective retailing formats represented
  bySephoraand the department store division, which now consists
  ofLe Bon MarchéandLa Samaritaine, two prestigious Parisian establishments.

In
  2002, the Selective Retailing business group posted net sales
  of EUR 3,337 millions, or 26% of the total net sales of LVMH.

29



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|                          | 2002           |   | 2001           |   | 2000           |  
|------------------------- | -------------- | - | -------------- | - | -------------- | -
|                          |                |   |                |   |                |  
|                          | Percent        |   | Percent        |   | Percent        |  
|**Country/Area**          | of
      Sales |   | of
      Sales |   | of
      Sales |  
|                          |                |   |                |   |                |  
|France                    | 26             |   | 25             |   | 21             |  
|Europe (excluding France) | 9              |   | 8              |   | 6              |  
|Americas                  | 37             |   | 36             |   | 39             |  
|Asia                      | 23             |   | 26             |   | 29             |  
|Rest of the world         | 5              |   | 5              |   | 5              |  
|                          |                |   |                |   |                |  
|Total                     | 100            | % | 100            | % | 100            | %
|                          |                |   |                |   |                |  
|Total (in EUR millions)   | 3,337          |   | 3,493          |   | 3,294          |  
|                          |                |   |                |   |                |  

As
  of December 31, 2002, the Selective Retailing business group
  operated 648 stores, as compared to 656 at the end of 2001 and
  643 at the end of 2000.

(a)  Travel Retail

DFS

DFSjoined LVMH in 1997 after
  LVMH acquired 61.25% of the company in December 1996 and February
  1997. This American group based in
  San Francisco is the pioneer and one of the world leaders in
  the sale of luxury products to international travelers. Its
  activity is closely linked to tourism cycles. Since it was founded
  in 1961 as a duty-free concession in the Kai Tak airport in
  Hong Kong,DFShas acquired an in-depth knowledge of the needs of traveling
  customers, built solid partnerships with Japanese and international
  tour operators, and has significantly expanded its business,
  particularly in the tourist destinations in the Asia Pacific
  region.DFShad 152 points of sale as of December 31, 2002.

Faced
  with the current increase in the cost of airport concessions,
  the strategy of theDFSgroup is now focused on the development and promotion of its
  city-center Galleria stores, which account for most of its sales.
  With an area of 3,000 to 17,000 square meters, the 12 Gallerias
  are located in the urban centers of major airline destinations
  in the Asia-Pacific region and in the United States. Each space
  combines in one site, close to the hotels where travelers are
  lodged, three different, but complementary commercial spaces:
  a general luxury product offer (perfumes and cosmetics, fashion
  and accessories, etc.), a gallery of prestigious boutiques (Louis
  Vuitton,Hermès,Bulgari,Tiffany,Christian Dior,Chanel,Prada,Fendi,Céline,
  etc.), and a recreational and souvenir complex.

While
  focusing on the development of its Gallerias which are its main
  source of growth,DFSmaintains its strategic interest in the airport concessions
  that can be obtained or renewed under good financial terms.DFSis now present in 22 international airports in the Asia-Pacific
  region and in the United States.

Miami
  Cruiseline

Miami
  Cruiseline, acquired by
  LVMH in January 2000, is an American company founded in 1963
  and is the world leader in the sale of duty-free luxury items
  on board cruise ships. It provides services to over 100 ships
  representing 26 cruise lines. It also organizes auctions and
  prepares product catalogs that are available on board or during
  stopovers.

The
  acquisition ofMiami Cruiselinegave the travel retail activity better organization of its geographic
  presence and a more diversified customer base, which was previously
  primarily Asian, and which is now supplemented by American and
  European cruise customers. There are also excellent synergies
  between the activities ofDFSand those
  ofMiami Cruiselinein the areas of management and merchandising.

The
  years 2000 and 2001 were devoted to the integration of the activities
  ofMiami Cruiseline.
  A more effective organization was implemented. ConcurrentlyMiami Cruiselinefocused its efforts on improving the quality of its product
  offer and adapting its product line to each cruise ship in order
  to increase the average expenditure per traveler. Particular
  emphasis is being given to watches and jewelry, which offer
  good opportunities for future growth.

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(b)  Selective Retailing

Sephora

TheSephorabrand,
  founded in 1970, has developed over time a perfume retailing
  format that combines direct access
  and customer assistance. This concept led to a new generation
  of stores with a sober and luxurious architecture, designed
  in three spaces dedicated to perfumes, make-up and skincare.
  Based on the quality of this concept,Sephorahas gained the confidence
  of selective perfume and cosmetics brands. The brand has also
  offered products sold under its own brand name since 1995.

Since
  it was acquired by LVMH in July 1997,Sephorahas recorded rapid growth
  in Europe by opening new stores and acquiring companies that
  operated perfume retail chains, including Marie-Jeannne Godard
  and the Italian companies Laguna, Boidi and Kharys.Sephorahas 404 stores in Europe
  today, located in 10 countries.

TheSephoraconcept
  also crossed the Atlantic in 1998 and the brand now has 74 stores
  in the United States, plus an internet site www.sephora.com.

Le
  Bon Marché

Established
  in 1852,Le Bon Marchéwas a pioneer of modern marketing in the 19th century. The sole
  department store located on the left bank in Paris, it was acquired
  by LVMH in 1998.

Le
  Bon Marchéhas a
  food store, La Grande Epicerie de Paris. Since 1995, it has
  also owned Franck et Fils, located on rue de Passy in the sixteenth
  district of Paris.

In
  recent years, a fundamental overhaul that included the renovation
  and remodeling of its sales spaces, together with moving to
  a more upscale product offer, have brought back toLe
  Bon Marchéits strong
  identity anchored in the modern world. Famous for its very demanding
  inventory and service policy,Le
  Bon Marchéis now
  the most exclusive and creative department store in Paris.

La
  Samaritaine

Founded
  in 1870,La Samaritaineis, likeLe Bon Marché, one of the first and most emblematic department
  stores in Paris. Located between the Louvre and Notre Dame de
  Paris, in a high-growth strategic district, it attracts both
  local customers and has a high potential with international
  visitors.

LVMH
  acquired 55% ofLa Samaritainein January 2001. With its help,La
  Samaritainehas developed
  a new growth strategy and started repositioning itself in the
  fashion and accessories sector, all in order to increase the
  franchises appeal to younger customers with strong purchasing
  power and at the leading edge of fashion trends.

The
  adoption of a new visual identity and a campaign under the signature
  Magasin Evolutes are the first initiatives to be
  implemented, together with the preparation of vast sales plan
  that will ensure steady growth forLa
  Samaritainebeginning in
  2003.

(c)  2002 Highlights

The
  5% decline from 2001 to 2002 in total net sales for the Selective
  Retailing business group hides contrasting trends.
  The travel retail business was penalized by the
  decline in tourism in 2002, whileSephoracontinued to grow in Europe
  and the United States.

In
  2003, in a still troubled economy, each of the selective retailing
  companies continues to improve its performance, effectively
  face the coming challenges and prepare for a potential economic
  recovery.

DFS

DFSsales for the full year in 2002 were down slightly, despite
  a slight increase in the fourth quarter of 2002, a period comparable
  to the difficult year-end suffered by the travel retail
  segment in 2001. Even though tourist travel slowly resumed throughout
  the year, travel flows are still well below 2000 levels.

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The
  efforts made byDFSto increase the competitiveness of its products proved effective.
  The company returned to break-even at the operating level as
  a result of strict measures to cut overhead expenses and the
  closing of under performing stores. The performance in Asia,
  which was better than projected, offset the loss centers in
  the United States.

In
  order to expand its presence in tourist destinations,DFShas just opened a new Galleria in Singapore and one at Japans
  Okinawa airport. It also renewed its airport concessions on
  Guam and in New Zealand.

Miami
  Cruiseline

Benefiting
  from the strong performance of the cruise market,Miami
  Cruiselineincreased both
  sales and income from operations as a result of the progress
  made in logistics and merchandising, combined with effective
  cost cutting measures.

Sephora

Sephorasuccessfully continued
  its policy of selective growth, giving priority to raising its
  profitability and marketing effectiveness. In 2002, the brand
  achieved net sales growth of 10%, excluding Japan and at constant
  exchange rates. This performance is noteworthy in the context
  of a deliberate slowdown in new store openings on both sides
  of the Atlantic.

ForSephoraEurope,
  the year 2002 was marked by implementation of measures aimed
  at improving its operations.

With
  its top priority being the improvement of its existing network,Sephoralimited
  the number of its net store openings in 2002 to 15 stores located
  in countries with the best prospects for long-term growth.Sephoraopened its first branded
  store in Athens, Greece and its first three stores in Prague
  in the Czech Republic. The success of these new stores, in terms
  of both sales and profits, confirms the remarkable potential
  of theSephoraconcept
  in Eastern Europe.

For
  the second consecutive year,Sephoraperformed well above the
  average for the selective retailing segment. After the 14% growth
  in sales on a constant store basis in 2001, the 25% increase
  recorded in 2002 demonstrates the commercial success of theSephoraconcept
  in a market where selective retailing recorded only weak growth.

In
  a move to streamline its network,SephoraUSA closed the Rockefeller
  Center store, but strengthened its presence in Manhattan with
  new stores and the renovation of the Times Square store, both
  in New York City.

Sephoraexceeded its targets for
  improved income from operations in the United States.

Sales
  at the sephora.com website rose steadily, and reported excellent
  results for the year-end holiday season.Sephora.comby far the largest American online beauty store,
  continues to expand its consumer base and the services it offers.

For
  2003,Sephorawill
  continue to expand its network selectively and improve the quality
  of its organization and stores to better serve customers. Its
  strategic priorities continue to be to improve profitability
  and to concentrate store openings in the cities and countries
  where theSephoraconcept offers the greatest potential. A flagship
  store will open on the rue de Rivoli in Paris sometime in the
  first half of 2003.

Le
  Bon Marché

To
  leverage its image as an exceptional store,Le
  Bon Marchéopened
  additional sales space to new luxury brands in 2002, and expanded
  itsChristian DiorandLouis Vuittonboutiques. Net sales continued to rise significantly despite
  a sluggish economy. The fashion accessories sector and La Grande
  Epicerie de Paris performed extremely well. The year 2003 will
  see the start of the renovation and expansion of the womens
  fashion department. This large-scale project, to be completed
  over a three-year period, will be one of the primary growth
  drivers for the store.

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La
  Samaritaine

In
  2002, the foundations which will allow the relaunch ofLa
  Samaritainewere laid,
  notably by closing the do-it-yourself department,
  which generated heavy losses. This closing impacted net sales
  in 2002, but it will allow reallocation of the space to the
  ready-to-wear apparel lines in 2003.

La
  Samaritaineis totally
  redefining its identity. From a store heavily geared to everyday
  products with a largely male customer base,La Samaritaineis being transformed into a quality department store focused
  on fashion and female customers. This transformation will anchor
  both its product offer and its image within a dynamic commercial
  environment and attract affluent customers with strong purchasing
  power and leading-edge tastes.

In
  addition, the logistic procedures will be completely revised
  in 2003 to make them more efficient and more cost effective.
  The restructuring of the sales and logistical organizations
  should continue until 2005.

(6)
  Other Activities

In
  2002, Other Activities included the media division managed by
  the D.I. group (ex Desfossés International), and Etude
  Tajan.

D.I
  group includes the press titlesLa
  Tribune,Investir,Connaissance des Arts,Le Monde de la MusiqueandDéfis,
  as well asRadio ClassiqueandSystem TV, an audio-visual production company. D.I.
  group sold its 33% interest in LV & Co in 2002 and disposed
  of theJazzmanmagazine in 2003.

Etude
  Tajan is the leading French auction house.

RISK MANAGEMENT
  POLICY

LVMH
  has a dynamic overall risk management policy based primarily
  on the following:

- systematic identification and
      documentation of risks;
- organized risk prevention and
      safety at work and protection of industrial assets;
- implementation of international
      crisis management systems and contingent plans;
- a comprehensive insurance program
      to reduce the financial consequences of major events on
      LVMHs financial statements; and
- worldwide coordination of master
      insurance programs.

LVMHs
  global approach is chiefly based on transferring its risks to
  the insurance markets under reasonable financial terms, within
  the parameters of the conditions available in those markets
  in terms of scope of coverage and limits. The extent of coverage
  is directly linked to the constraints of the insurance market.

Compared
  with LVMHs financial capacity, the level of self-insurance
  it assumes is not significant. The deductibles retained by LVMHs
  business entities reflect an optimized balance between coverage
  and total cost of risk. Insurance costs paid by LVMH entities
  are less than 0.4% of consolidated revenues. The financial ratings
  of LVMHs main insurance partners are reviewed on a regular
  basis. The main insurance programs coordinated by LVMH are designed
  to cover property damage, business interruption, marine, third
  party liability and product recall.

Most
  of LVMHs manufacturing operations are covered under a
  consolidated international insurance program for property damage
  and subsequent operating losses. Other business operations are
  covered under programs coordinated at the corporate level. Property
  damage insurance limits are in line with asset values. Business
  interruption insurance limits reflect gross margin exposures
  of LVMHs business entities for a period of indemnity extending
  from 12 to 24 months based on actual exposures. Coverage for
  natural events granted under LVMHs international
  damage insurance program is limited to EUR 50 million per claim
  and EUR 150 million per year. These levels are in line with
  LVMH business units exposures.

LVMH
  has implemented a liability and product recall insurance program
  for all its subsidiaries on a worldwide basis. This program
  is designed to provide the most comprehensive coverage to respond
  to LVMH identified risks, given the capacity and coverage available
  in the international insurance market. Coverage levels are in
  line with

33



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those of companies with comparable
  business activities. Risks related to the environment and accidental
  pollution are covered under this program.

In
  countries such as in the United States where no state insurance
  schemes are available for work-related accidents, specific insurance
  policies have been implemented. Coverage levels are in line
  with the various states legal requirements.

To
  identify, analyze and treat industrial and environmental risks,
  LVMH relies on a combination of outside experts and qualified
  professionals working together with business units, particularly
  with staff in charge of safety, quality and environmental issues.
  The business of LVMHs companies is such that special attention
  is paid to exposures relating to storage and shipment of raw
  materials and finished products.

LVMHs
  policy for industrial risk prevention aims to apply the highest
  safety standards. Working with its insurers, LVMH applies HPR
  (Highly Protected Risks) standards and has established an incentive
  program for risk prevention investments. These amounts are taken
  into account by underwriters in their risk assessment process.
  This approach is combined with a program to survey industrial
  and environmental risks. In 2002, engineering consultants devoted
  170 auditing days to the program. In addition, prevention and
  protection schemes include contingent planning to ensure business
  continuity.

In
  addition to industrial safety, LVMH companies are also working
  to achieve greater product safety and traceability. The HACCP
  method (Hazard Analysis Critical Control Point) is used by the
  companies in the Wines and Spirits and Perfumes and Cosmetics
  business groups. The purpose of this approach is primarily to
  increase LVMHs ability to anticipate and respond in the
  event of a product recall.

ORGANIZATIONAL
  STRUCTURE

The
  following is a simplified organizational chart, showing LVMH,
  its key subsidiaries and their relationship to the key holding
  companies in the group as of March 31, 2003:

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| | The
      above chart has been established in view of evidencing the trademarks
      and tradenames controlled by the main LVMH holding companies.
      It does not provide an exhaustive list of LVMH shareholdings.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

35

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35-A

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Significant Subsidiaries

The following is a list of LVMHs
  significant subsidiaries (as defined in rule 1-02(w) of Regulation
  S-X):

|                                   |                                |  | LVMHs
      Ownership |   |                           |  
|---------------------------------- | ------------------------------ |  | ---------------------- | - | ------------------------- | -
|Name
      of Company              | Country
      of Incorporation |  | Interest               |   | LVMHs
      Voting Power |  
|                                   |                                |  |                        |   |                           |  
|Louis Vuitton Malletier
      SA   | France                         |  | 100                    | % | 100                       | %
|Louis Vuitton Japan
      KK       | Japan                          |  | 100                    | % | 100                       | %
|Jas Hennessy &
      Co. SCS       | France                         |  | 65                     | % | 99                        | %
|Sofidiv SAS                        | France                         |  | 100                    | % | 100                       | %
|Champagne Moët
      & Chandon SCS | France                         |  | 66                     | % | 100                       | %
|Delphine SA                        | France                         |  | 100                    | % | 100                       | %
|LVMH Inc.                          | USA                            |  | 100                    | % | 100                       | %

PROPERTY, PLANTS
  AND EQUIPMENT

Wines and Spirits

In
  addition to its inventories, much of LVMHs assets in this
  business group consist of its vineyards, particularly in the
  Champagne region of France, where LVMH is the largest land owner.
  LVMH owns the following approximate acreage:

|                                |       |  | Owned
      & | 
|------------------------------- | ----- |  | ------------- | 
|                                | Owned |  | Farmed        | 
|                                |       |  |               | 
|Champagne label                 | 4,189 |  | 3,690         | 
|Cognac label                    | 622   |  | 439           | 
|Yquem                           | 464   |  | 272           | 
|Other wines:                    |       |  |               | 
|California                      | 1,306 |  | 798           | 
|Argentina                       | 3,379 |  | 1,210         | 
|Australia
      and New Zealand | 1,850 |  | 800           | 
|Other: Brazil and Spain         | 746   |  | 205           | 

In
  the above table, the difference between the two columns represents
  areas which are planted but not yet productive, areas that are
  not planted and areas that cannot be used to grow grapes.

LVMH
  also owns office and industrial buildings, wineries, cellars
  and public relation centers linked to each of its main brands
  and its production operations in France, California, Argentina,
  Australia, Brazil, New Zealand, and Spain, as well as Cognac
  distilleries and warehouses. All together these properties represent
  approximately 773,000 square meters in France and 137,000 square
  meters outside of France. LVMH leases the offices of the Wines
  and Spirits business group in the worlds largest cities.

Fashion and Leather Goods

Louis
  Vuitton Malletier owns the premises (of approximately 56,000
  square meters) that house its offices and workshops at the Pont
  Neuf in Paris and the companys headquarters, through its
  subsidiary La Belle Jardinière. Part of these premises
  are leased to third parties as offices and shops. La Belle Jardinière
  also owns an office block on the rue du Pont Neuf in Paris,
  which it leases toCéline.

Louis
  Vuittons retail outlets
  can be found in prime locations in the worlds largest
  cities, and are generally leased from local owners. However,Louis Vuittonowns the freehold of its stores in Kobe, Japan, as well as in
  Hawaii, Guam, Seoul, and Sydney, and it finance-leases its store
  located on avenue Montaigne in Paris.

In
  2002, theLouis Vuittonnetwork expanded through seven new shops, including four new
  global stores, which brought the total network of global stores
  to 40.

LVMH
  owns thirteenLouis Vuittonmanufacturing and warehousing facilities which are primarily
  located in France, although significant LVMH-owned manufacturing
  facilities are also located near Barcelona, Spain and in

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San Dimas, California. LVMH owns
  itsLouis Vuittonwarehouses in France and leases those in Hawaii, Asia and Oceania.
  Altogether these properties represent a total of 115,000 square
  meters.

Célineowns an office building on avenue Montaigne in Paris, which
  it leases out and commercial property on rue François
  Premier in Paris which it leases toFendi.
  Its retail stores, located in major cities worldwide, are leased
  from local owners.Célinealso owns its production and distribution
  facilities near Florence, Italy and leases warehouses from owners
  in Hong Kong.

The
  premises ofLoewestores are leased, with the exception of its shop located at
  46 avenue Montaigne in Paris, which is owned by LVMH. The Barcelona,
  Villaverde, and Getafe workshops in Spain, which manufactureLoeweproducts and accessories for other LVMH brands, are leased.Loeweleases its head office facilities in Madrid.

Fendiowns its production site near Florence, Italy. Its administrative
  and marketing functions are centralized in Rome, and are finance-leased.
  AllFendistores worldwide are leased.

Berlutileases its stores. Its subsidiary,StefanoBiowns a shoe production facility in Ferrara, Italy.

Kenzo,Givenchy,
  andChristian Lacroixlease their executive offices, workshops and store spaces located
  in Paris, and their retail stores throughout the world.

Kenzoleases distribution facilities near Tours in France, which serve
  theKenzo,Christian Lacroix,Céline,
  andGivenchyfashion
  businesses.

Thomas
  Pinkleases all of the
  premises it uses, including its offices and warehouses in London
  and stores throughout the world.

Perfumes and Cosmetics

Parfums
  Christian Diormaintains
  its production and distribution facilities on LVMH-owned land
  near Orléans in France. In addition,Parfums
  Christian Dioroccupies,
  as its headquarters, on a sale-leaseback arrangement with an
  option to purchase, a building located in the center of Paris.
  The building in Paris and its offices in Orléans, serve
  asParfums Christian Diors
  executive offices.

Parfums
  Christian Dioralso owns
  offices in Germany, Spain and Italy, and rents offices and warehouses
  in many cities in the world.

The
  twoGuerlainproduction centers are located on plots of land owned by LVMH
  at Orphin and Chartres, in France.Guerlains
  headquarters in Levallois, near Paris, are rented.

Parfums
  Givenchymaintains its
  executive offices in leased premises in Levallois, France and
  owns factory and storage facilities in Beauvais and Vervins
  in France. BothGivenchyandKenzoperfume product lines are produced at the Vervins factory.

In
  addition,Parfums Christian
  Dior,GuerlainandParfums Givenchylease together offices and distribution and retail facilities
  in New York, Tokyo, London and in other countries throughout
  the world.

La
  Brosseet
  Dupont(a more than 99%
  owned subsidiary of Laflachère) owns five plants in France
  and leases five others in France and one in Spain.La
  Brosse etDupontalso runs four distribution sites in France, four of which are
  leased. Offices are leased in France, in various European countries
  and in Hong Kong.

Blissleases its offices and the premises used for a spa in New York
  City.

TheMake Up For Everheadquarters located in the Paris region is lease-financed;
  the shop premises are leased.

BeneFitCosmetics leases its retail
  stores and offices in California.

Watches and Jewelry

TAG
  Heuerleases studios and
  warehouses in Switzerland in La-Chaux-de-Fonds and in St-Imier
  as well as office space, including its headquarters in Neuchâtel.TAG Heueralso leases offices and distribution centers in the

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United States, Canada, Asia, Australia,
  and in several European countries. Its subsidiary Cortech, manufacturer
  of watch cases, owns workshops and office premises in Cornol,
  Switzerland.

Fredleases office space in Paris as well as stores in France, Monaco,
  Japan, and in the United States.

Les
  Ateliers Horlogers, formerly Benedom, leases its offices and
  a factory in La-Chaux-de-Fonds, Switzerland.

Ebelowns an industrial building complex in La Chaux-de-Fonds, Switzerland,
  which includes warehouses, office space and La Villa Turque,Ebels
  public relations center.Ebelalso owns a rental building in Basle, Switzerland.

Zenithowns the plant where it manufactures its movements and watches
  in Locle, Switzerland. Its warehouses and commercial premises
  located throughout Europe are leased.

Chaumetleases its offices in Paris, as well as the premises of its
  retail stores and the offices of its subsidiaries worldwide.

Omasowns a building located in Bologna, Italy where LVMHs
  manufacturing facilities and headquarters are centralized.

Selective Retailing

DFSleases its executive offices, with the exception of its office
  facilities in Guam, which it owns.DFSalso leases
  its retail stores, with the exception of its stores in Waikiki
  (Hawaii), Guam (Tumon Bay Gallerie) and Saipan, which it owns.

LVMH
  owns a commercial property in Saipan, and a building in Guam
  where it has set up its leisure activities.

Sephoraleases its offices in Boigny,
  near Orléans, in the Paris region, and in San Francisco
  in the United States. In the countries whereSephorais present, its shops and
  warehouses are leased. The premises of the Champs Elysées
  store were acquired by LVMH in 1998 and resold by it in 2002.

Le
  Bon Marchéowns
  three buildings in Paris (with a surface of approximately 85,000
  m2), most of which are used for its stores and offices,
  and a portion of which are rented out as offices to third parties.Le Bon Marchéleases its storage facilities in Bagneux near Paris.

Franck
  et Filsowns two buildings
  in Paris which it uses as stores; a portion of these buildings
  are also rented out to third parties as apartments.

La
  Samaritaineowns several
  buildings in Paris with offices and shops, representing approximately
  129,000 m2. Parts of these buildings are rented to third
  parties.La Samaritainealso owns storage facilities in Marne La Vallée near
  Paris.

Other Activities

D.I.
  Group, including D.I. Régie, rents offices in Paris.Sid Editionsrents offices in Paris and in Poitiers, France.Radio
  Classiquerents offices
  in Paris.

LVMH
  headquarters which were previously housed in a building on avenue
  Hoche in Paris owned by LVMH (but since transferred), have moved
  to two buildings on avenue Montaigne in Paris and avenue Edouard
  Vaillant in Boulogne Billancourt which are leased by LVMH.

LVMH
  owns a building in New York on 57th Street which also houses
  the United States offices ofParfums
  Christian Dior,Céline,Guerlain,Parfums Givenchy,Parfums Kenzoand Louis Vuitton Malletier. In 2001, LVMH acquired a building
  on 57thStreet, in New York which will house aLouis
  Vuittonstore and offices.

Tajan
  rents a building on rue des Mathurins in Paris, where it has
  set upLespace Tajan,
  which includes the companys offices, and auction rooms.

LVMH
  believes its manufacturing and storage facilities are adequate
  for its present needs.

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ITEM 5. OPERATING AND FINANCIAL
  REVIEW AND PROSPECTS

OPERATING RESULTS

General

LVMHs
  business consisted in 2002 of five principal business groups:
  Wines and Spirits (which is comprised of champagne and wines,
  and cognac and spirits), Fashion and Leather Goods, Perfumes
  and Cosmetics, Watches and Jewelry and Selective Retailing.
  In addition, LVMH has interests in business and financial media
  companies and in auction art sales, included under Other
  Activities. The Watches and Jewelry business group was
  created in 1999 and was included in Other Activities
  in 1999. It has reported as a separate business group since
  the beginning of 2000.

The
  consolidated financial statements of LVMH have been prepared
  in compliance with the French Law of January 3, 1985 and the
  new French regulation 99.02 enacted by theComité de Réglementation Comptable,
  published in June 22, 1999, effective as of January 1, 2000.
  Regulation 99.02, has had no material impact on stockholders
  equity and earnings of LVMH. French Accounting Standards vary
  in certain respects from accounting principles generally accepted
  in the United States (United States GAAP). For a
  reconciliation with United States GAAP, see Item 17  Financial
  Statements  Note 34 of the Notes to the Consolidated
  Financial Statements.

Basis for Presentation

Critical
  Accounting Policies

The
  preparation of the LVMH consolidated financial statements requires
  the use of estimates and assumptions. Those estimates and assumptions
  are based on historical experience and other factors deemed
  to be reasonable under the circumstances. Actual results may
  differ from these estimates under different assumptions or conditions.

LVMH
  believes that of its significant accounting policies, the following
  may involve a higher degree of judgment or complexity:

Brands
  and Goodwill

LVMHs
  brands and trademarks are of key and crucial importance to LVMHs
  business.

Notwithstanding
  that the brands and goodwill amounts recognized in the consolidated
  financial statements are significant (their combined net book
  values represent 36.6% of the December 31, 2002 total assets),
  the amounts initially recorded are subject to LVMH managements
  highly sensitive estimates and assumptions as well as to a high
  degree of judgment, present at several levels

The
  recognition of the initial values of brands and goodwill from
  acquired businesses in the consolidated financial statements
  is based upon managements allocation of the purchase price
  of acquired businesses to all identified assets acquired and
  liabilities assumed, at fair value. The asset allocation includes
  managements determination that the acquired brand is well-known
  and individually identifiable, with measurable value development
  over time. Managements estimates are subject to the selection
  of the most appropriate assumptions related to prospects in
  terms of economic growth, potential of the acquired businesses,
  strategic plans, and other matters, which inherently include
  a high degree of complex judgment and uncertainty.

Under
  French GAAP, goodwill is amortized over its estimated useful
  life. The useful life is estimated at the time the assets are
  acquired and is based on historical experience with similar
  assets or estimates of the period that the asset will generate
  revenue. For United States GAAP purposes, goodwill amortization
  was discontinued on January 1, 2002 in accordance with the adoption
  of SFAS No. 142.

Goodwill
  and brands with an indefinite life are tested for impairment
  at each reporting unit level, on an annual basis at least and
  whenever changes in circumstances indicate that goodwill and
  brand amounts may not be recoverable. Under United States GAAP,
  the impairment analysis of goodwill and brands with an indefinite
  life is performed using the two-step approach prescribed by
  SFAS No. 142. The first step consists of comparing the fair
  value and book value of the reporting units. Fair value is assessed
  using the discounted future cash-flow method. When fair value
  is less than book value, LVMH engages in the second step which
  requires a valuation of the

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reporting unit assets and liabilities,
  including brands, to determine an implied fair value of the
  associated goodwill. This valuation is performed by external
  or in-house experts and if the experts valuation indicates
  that the implied fair value of the reporting units goodwill
  is less than the carrying value of the goodwill, an impairment
  loss equal to the difference is recorded through the income
  statement.

Under
  French and United States GAAP, when indicators of impairment
  exist, brands are tested for impairments. When the fair value
  of the brands is below their carrying value, an impairment loss
  is recognized for the difference.

Determination
  of fair values is generally based on a discounted cash-flow
  analysis that involves a high degree of judgment and is based
  on sensitive assumptions for future operating performance, discount
  rates, economic growth, competitive conditions, and other matters.
  When necessary, discounted cash-flow results are reviewed and
  validated by external experts.

LVMHs
  net income in any given financial period may be materially impacted
  by a non-recurring impairment charge.

Deferred
  tax assets

The
  deferred tax assets recognized in the consolidated balance sheet
  result primarily from tax losses carried forward and temporary
  differences between the carrying amounts of assets and liabilities
  and their valuation for tax purposes.

Recoverability
  of deferred tax assets recognized in the consolidated financial
  statements is assessed by management periodically using taxable
  profit forecasts and tax planning strategies as well as considering
  the likelihood that such forecasts will be realized. Management
  assumptions and historical experiences are taken into account
  in making these assessments.

Should
  assumptions differ from actual results, LVMHs net income
  in any given financial period would be materially impacted by
  a non-recurring allowance of deferred tax assets. On the contrary,
  should management determine that deferred tax assets which it
  previously characterized as non-recoverable may in fact be recoverable
  after a review of assumptions, LVMHs net income would
  be impacted by a non-recurring profit.

Investment
  securities

LVMH
  has investments in equity securities of both public and private
  companies where it does not have the ability to exercise significant
  influence over the investees business.

Under
  French GAAP, LVMH's policy is the same for all investments in
  the equity securities of both public and private companies.
  Investments in both public and private companies are carried
  at cost. If management determines that the investment is impaired,
  the decline in fair value is recognized in the consolidated
  statement of income. In estimating fair value, LVMH considers
  market conditions, offering prices, trends of earnings/losses,
  price multiples, financial position, new financing and other
  key measures. LVMH believes its estimates result in a reasonable
  reflection of the fair values of these investments.

Under
  United States GAAP, investments in public companies are carried
  at fair value based on quoted market prices with changes in
  fair value recorded through the other comprehensive income
  component of stockholders equity, unless determined to
  be an other than temporary decline in the fair value, in which
  case the decline in fair value is recognized in the consolidated
  statement of income. Investments in private companies are recorded
  at cost unless determined to have an other than temporary decline
  in the fair value, in which case the decline in fair value is
  recognized in the consolidated statement of income.

In
  the case of either investment type, for United States GAAP purposes,
  declines in the fair value of the investments are reviewed to
  determine whether they are other than temporary in nature in
  accordance with interpretations of SFAS 115 Accounting
  for Certain Investments in Debt and Equity Securities
  and SEC Staff Accounting Bulletin No. 59 Accounting for
  Noncurrent Marketable Equity Securities. For public company
  investments, absent any other indications of a decline in value
  being other than temporary in nature, the LVMHs policy
  is to treat a decline in the investments quoted market
  value that has lasted for more than six months as an other than
  temporary decline in value. LVMHs policy is the same for
  private company investments, however, their fair values are
  estimated. In estimating fair value, LVMH considers market conditions,
  offering prices, trends of

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earnings/losses, price multiples,
  financial position, new financing and other key measures. LVMH
  believes its estimates result in a reasonable reflection of
  the fair values of these investments.

Consolidated Operations 
  2002 as compared to 2001

Consolidated
  sales for the year 2002 climbed to EUR 12,693, up 4% from the
  previous year. This figure only partially reflects what really
  occurred, since currency fluctuations against the euro, particularly
  the drop in the yen and then the U.S. dollar, limited the increase,
  which amounted to 9% at constant exchange rates.

Net
  sales of the Wines and Spirits business group increased by 2%.
  Excluding the impact of thePommerydisposal in the first half of 2002 and at constant exchange
  rates, the actual growth was 11%. These figures reflect the
  strong recovery in demand for champagne, notably in the United
  States and in Europe, as well as further expansion of cognac
  sales in Asia, excluding Japan, and in the United States. They
  do not include LVMHs interest in Millennium Import LLC
  which was acquired in July 2002 and accounted for using the
  equity method.

In
  2002, net sales for the Fashion and Leather Goods business group
  increased 16%, a performance chiefly reflecting 7% rise inLouis
  Vuittonsales at constant exchange rates, notably
  in Japan and in the United States. The overall change in Fashion
  and Leather Goods sales includes the effects of theDonna
  Karanconsolidation as of January 1, 2002 and the
  full consolidation ofFendi,
  which had been consolidated on a proportionate basis at 50%
  in 2001. Sales were up 5%, after excluding the effects of changes
  in consolidation and at constant exchange rates.

The
  Perfumes and Cosmetics business groups net sales rose
  5% in 2002, or 8% at constant exchange rates and taking into
  account the integration ofLoeweperfumes
  in 2002. This increase in sales reflects the success of recent
  new products and increased sales in all markets, particularly
  in Europe. Only the United States reported a decline in sales.

Net
  sales of the Watches and Jewelry business group rose 1% in 2002,
  or 3% at constant exchange rates, with significant advances
  in Japan and other Asian countries. This performance occurred
  against a backdrop of revamped product lines, market repositioning
  and a shutdown of LVMH manufacturing and distribution activities
  on behalf of other brands.

In
  2002, Selective Retailing net sales declined 4% overall. However,
  this figure masks very different situations among the individual
  companies. Sales atDFSfell 9%
  at constant exchange rates. The continued effects of the terrorist
  attacks of September 11, 2001, and the decline in Japanese tourist
  travel caused by the unfavorable parity between the yen and
  the dollar, negatively impactedDFSsales.Sephoras
  sales rose 7% in local currencies, with the United States recording
  a 28% increase.Miami Cruiselinesales increased by 7% in local currencies andLe
  Bon Marchéreported
  a 4% increase in sales in 2002, while net sales atLa
  Samaritainewere down owing
  to a thorough revamping of the product range and disruption
  caused by renovation work.

In
  2002, net sales from media and art and auction businesses (included
  under Other Activities) were EUR 163 million, down from EUR
  244 million in 2001, essentially due to the deconsolidation
  ofPhillipsat year-end 2001.

Changes
  in the scope of LVMHs consolidation, its businesses and
  in the monetary environment during 2002, caused a slight shift
  in the contribution of each business group to total net sales
  at current exchange rates. Selective Retailings share
  fell from 29% to 26% of the total while Fashion and Leather
  Goods rose from 29% to 33%. The percentages of the other business
  groups remained stable, with Wines and Spirits at 18%, Perfumes
  and Cosmetics at 18% and Watches and Jewelry at 4%. For details
  with respect to changes in LVMHs consolidation, see Item
  17  Financial Statements  Note 3 to
  the Consolidated Financial Statements.

Changes
  in net sales by geographic region along with changes in consolidation
  scope described in Item 17  Financial Statements
   Note 3 to the Consolidated Financial Statements (i.e.
  the disposal ofPommery,
  the consolidation ofDonna
  Karanand full consolidation
  ofFendi),
  kept the breakdown of net sales by currency practically unchanged,
  even though the yen and U.S. dollar weakened against the euro.
  In 2002, breakdown remained as follows with the euro at 32%,
  the U.S. dollar at 33%, the yen at 16% and other currencies
  at 19%, including 5% for the Hong Kong dollar.

Gross
  margin was EUR 8,130 million, representing 64% of net sales,
  a 2 percentage point increase from 2001 due to the favorable
  effect of currency hedges.

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Marketing
  and selling expenses rose 3% to EUR 4,705 million, a figure
  that changes little on a comparable structural and currency
  basis. This figure reflects LVMHs increasing selectivity
  in its advertising campaigns and a relative decline in the number
  of new store openings, compared with 2001.

In
  2002, general and administrative expenses declined 2% from 2001
  to EUR 1,417 million, and 4% on a comparable structural and
  currency basis.

Income
  from operations grew 29% to EUR 2,008 million. This increase,
  which far exceeds that of net sales, stems from LVMHs
  improved gross margin and its control of marketing and administrative
  expenses as mentioned above.

Income
  from operations for the Wines and Spirits business group climbed
  11% to EUR 750 million, a confirmation of growing volumes and
  margins.

Income
  from operations for the Fashion and Leather Goods business group
  rose 2% to EUR 1,297 million after climbing 9% in 2001. Sales
  were adversely affected for several months in the wake of the
  September 11th, 2001 terrorist attacks, making any comparisons
  with the previous year appear unfavorable.

The
  Perfumes and Cosmetics business group reported an 8% increase
  in income from operations to EUR 161 million. This upward trend,
  which occurred mainly in the second half of the year, confirms
  the success of new products launched over this period.

The
  Watches and Jewelry business group reported a EUR 13 million
  loss from operations, due primarily to the aforementioned shutdown
  of manufacturing and distribution activities on behalf of other
  brands and the cost of advertising campaigns, supporting new
  product launches.

The
  Selective Retailing business group earned a EUR 20 million income
  from operations versus a EUR 213 million loss in 2001. This
  improvement was due to the lower break-even point atDFS,
  which has now returned to breakeven at an operating level, the
  closing ofSephorain
  Japan and Germany, and the sharp turnaround in Sephoras
  results in the United States, which are now close to break-even.

The
  Other Activities business group posted a EUR 207 million operating
  loss in 2002, an improvement from the EUR 353 million loss reported
  in 2001. This includes the results from the press and media
  businesses, which recorded a loss due to the abrupt decline
  in financial advertising revenue, results from thee-Luxury.comwebsite whose business is growing rapidly while still being
  unprofitable and LVMHs central expenses. These activities
  also included operating losses atPhillipsin 2001.

Net
  financial expenses were reduced to EUR 294 million in 2002 from
  EUR 459 million in 2001. The decrease reflects lower interest
  rates, the positive cash flow generated from the disposal of
  LVMHs equity stake in Gucci in 2001, asset sales conducted
  in 2002 and the strong increase in cash flow provided by operating
  activities compared to 2001.

Other
  income and expenses primarily include the following items: a
  EUR 55 million gain from the disposal ofPommery,Hard CandyandUrban Decayas well as various properties and equity stakes in Fininfo and
  Grand Marnier; an additional EUR 200 million provision for the
  depreciation of the equity stake in Bouygues; EUR 116 million
  in non-recurring asset depreciation, which included EUR 41 million
  for inventory and EUR 55 million for intangible assets; EUR
  17 million net gain from the sale of LVMH shares and changes
  in provisions on these shares; and finally an amount of EUR
  161 million relating notably to provisions for the restructuring
  ofMoët Hennessys
  retail network in some regions, the final cost for disposing
  of the residual shareholding inPhillipsand the closing of certain stores.

The
  average 2002 tax rate of 27% is lower than that reported in
  2001 due to the use in 2002 of the tax losses from certain activities.

LVMHs
  share from investments accounted for using the equity method
  was a loss of EUR 18 million. This primarily reflects LVMHs
  share in the results of Millennium and Bonhams, as well as its
  50% stake in its joint venture withDe
  Beers. In 2001, it also
  included LVMHs share ine-Luxury.coms results.

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Net
  income before amortization of goodwill and unusual items rose
  to EUR 818 million in 2002, from EUR 334 million at year-end
  2001.

In
  2002, goodwill amortization was EUR 262 million, up from EUR
  168 million the previous year. This increase results from the
  reduction of the amortization period forDFSto 20 years
  and changes in consolidation scope, particularly the integration
  ofFendiandDonna Karan.

Minority
  interests rose from EUR 99 to EUR 131 million, primarily due
  to Wines and Spirits results, in which Diageo holds a 34% interest.

LVMH
  reported a net income of EUR 556 million in 2002; as opposed
  to EUR 10 million in 2001 after EUR 156 million of unusual items.

Consolidated Operations 
  2001 as compared to 2000

Consolidated
  sales for the year 2001 were EUR 12,229 million, up 6% from
  the previous year, and 43% higher than 1999. Sales growth was
  13% in the first half of 2001. However, the uncertain economic
  environment and the consequences of the tragic events of September
  in the United States weighed heavily on activity in the second
  half of the year, particularly in the final months of the year,
  which are crucial for LVMH. While sales remained steady for
  the European Union as a whole, with growth of 10% for the year,
  LVMHs other traditional areas of activity saw their sales
  growth limited, with 5% growth in the United States, 4% in Japan
  (13% in yen) and steady sales in Asia (excluding Japan).

The
  effects of this uncertain economic environment on the main business
  activities of LVMH varied widely. The Fashion and Leather Goods
  business group remained remarkable both for its 13% growth rate
  and for its geographic range, as Asia (including Japan) was
  the only region in which sales grew by less than 10%, even though
  sales in Japan grew 20% in yen.

The
  Perfumes and Cosmetics business group expanded 8%, primarily
  in Europe and the United States. Sales of Wines and Spirits
  declined in all major markets. Despite growth of 3% in cognac,
  Wines and Spirits business group sales as a whole declined by
  4% over 2000. The Selective Retailing business group, which
  grew by 6%, benefited from the growth ofSephoraand the effects of the
  acquisition ofLa Samaritaine,
  despite the fact thatDFS
  net sales declined by 10%.

Sales
  for the Watches and Jewelry business group declined 11% as a
  result of the discontinuation of certain subcontracting activities
  and the market repositioning of this new business group created
  in late 2000.

These
  changes in consolidated sales included the positive effects
  of changes in the scope of consolidation, which were 3%, and
  the negative effects of exchange rate fluctuations which were
  less than 0.5%. The increase in the dollar did not offset the
  decline in the yen. On a comparable structural and currency
  basis, organic growth in consolidated sales would have been
  3%.

Changes
  in the scope of LVMHs consolidation, as described in Item
  17  Financial Statements  Note 3 to
  the Consolidated Financial Statements, did not have a significant
  impact on the breakdown of consolidated sales for the fiscal
  year by business group, which remained stable: Wines and Spirits
  18%; Fashion and Leather Goods 30%; Perfumes and Cosmetics 18%;
  Watches and Jewelry 5%, and Selective Retailing 28%.

However,
  the change in the economic and monetary environment slightly
  altered the breakdown of sales among the main invoicing currencies.
  The weight of the U.S. dollar declined from 35% to 32% of LVMHs
  total sales, in favor of the euro, which rose from 29% to 31%.
  The proportion of other currencies remained stable, particularly
  the yen, which represented 16% of LVMHs sales.

In
  2001, gross margin totaled EUR 7,575 million, a margin rate
  on total revenue of 62% which represents a decline of one point
  from 2000.

Marketing
  and selling expenses amounted to EUR 4,568 million in 2001,
  an increase of 9% from 2000, and 6% on a comparable structural
  and currency basis. This change reflects an increase in the
  number of LVMH owned and managed stores, to 1,501 at the end
  of December 2001, primarily under theLouis
  Vuittonname and the Selective

43



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Retailing brands. This increase
  is also the result of increased communication expenses incurred
  in connection with new product launches, particularly in the
  Perfumes and Cosmetics business group during 2001.

In
  2001, general and administrative expenses were EUR 1,447 million,
  an increase of 21% from 2000, or 17% on a comparable structural
  and currency basis.

Income
  from operations totaled EUR 1,560 million in 2001, a 20% decline
  from 2000. Income from operations for the Fashion and Leather
  Goods business group was EUR 1,274 million, increasing 9% over
  2000. The Wines and Spirits and the Perfumes and Cosmetics business
  groups reported income from operations of EUR 677 million and
  EUR 149 million respectively, declining by 6% and 19%, essentially
  for the reasons described above relating to the uncertain economic
  environment. However, the decline in income from the Wines and
  Spirits business group results from two opposing trends: a decline
  of 18% for champagnes and wines, but an increase of 15% for
  cognac. Income from operations for the Watches and Jewelry group
  was EUR 27 million, compared to EUR 59 million in 2000, as a
  result of the repositioning of its activities and products.
  The income from operations of the Selective Retailing business
  group, which was at break-even in 2000, became negative EUR
  194 million in 2001. This was primarily the result ofSephoras
  activities in the United States, where recently opened stores
  have not yet reached their break-even point. It is also the
  result ofDFSandMiami Cruiselinehaving suffered a sharp year-end fall in the number of passengers,
  on both international flights and cruise ships.DFSwas also affected by the unfavorable exchange rate of the yen
  against the U.S. dollar, which had a negative effect on Japanese
  tourists. Operating income from Other Activities, which was
  negative EUR 372 million, reflected both the increase in corporate
  expenses attributable to the growth of LVMH, and the costs of
  developing the international activities of Phillips, de Pury
  & Luxembourg. In 2001, LVMHs internet sites, particularlySephora.com,
  sharply reduced their expenses, as their development phase was
  largely completed.

In
  2001, net financial expenses amounted to EUR 459 million, compared
  to EUR 421 million in 2000. This change reflects an increase
  in the current net financial debt, resulting from LVMHs
  expansion and its operating and financial investments.

Dividends
  received from unconsolidated investments declined from EUR 45
  million to EUR 21 million, mainly as a result of the reduction
  in June 2001 of LVMHs interest in Diageo. In 2001, this
  amount mainly included ordinary dividends received from LVMHs
  interest in Gucci.

In
  2001, other income and expenses included capital gains of EUR
  39 million from sales of LVMH treasury Shares, and a EUR 343
  million provision for depreciation of these shares held at year-end.
  In 2000, capital gains from LVMHs treasury Shares totaled
  EUR 115 million. In 2001, other income and expenses also included
  the depreciation of point of sales advertising items in the
  Perfumes and Cosmetics business group, and the depreciation
  of various assets, specifically unconsolidated investments.

The
  2001 average tax rate was lower than that recorded in 2000,
  because of the tax use of the temporary increase in deficits
  for some businesses.

Losses
  from equity investments amounted to EUR 42 million in 2001.
  This loss mainly represents LVMHs share in results of
  thee-Luxuryweb site, and from start-up costs of LVMHs
  joint venture withDe Beers.

Net
  income before amortization of goodwill and unusual items totaled
  EUR 334 million in 2001, compared to EUR 846 million in 2000.

In
  2001, amortization of goodwill, excluding unusual items, totaled
  EUR 168 million, compared to EUR 141 million for the previous
  year. This increase reflects above-mentioned changes in the
  scope of consolidation.

In
  2001, minority interests in net income before amortization of
  goodwill and unusual items was EUR 99 million, compared to EUR
  179 million in 2000. This decline is related to the effects
  of the economic downturn on income.

In
  2001, unusual items included earnings of EUR 864 million related
  to the investment in Gucci shares, including a capital gain
  of EUR 774 million from the sale of this investment and an exceptional
  dividend of EUR 90 million recorded during the fourth quarter
  of the year. Unusual items also included a restructuring provision
  of EUR 446 million, including a EUR 385 million provision for
  Selective Retailing. Exceptional asset depreciation or amortization
  expenses were also recorded, including EUR 323 million for DFS
  goodwill, EUR 83 million for the

44

---

Bouygues investment, EUR 60 million
  for unconsolidated media and telecommunications investments
  and EUR 141 million for the impairment of the goodwill and assets
  of Phillips, de Pury & Luxembourg. This expense mainly corresponds
  to the full amortization of the related goodwill. Unusual items
  are presented net of their positive impact on taxes representing
  EUR 71 million.

Net income totaled EUR 10 million
  in 2001.

Consolidated Data Discussed by
  Business Group for 2000, 2001 and 2002  Geographic Information
  and Investments

|                                           | 2002   |                         | 2001   |   | 2000   |  
|------------------------------------------ | ------ | ----------------------- | ------ | - | ------ | -
|                                           |        |                         |        |   |        |  
|                                           |        | (in
      EUR millions) |        |  
|Net Sales                                  |        |                         |        |   |        |  
|Wines and Spirits                          | 2,266  |                         | 2,232  |   | 2,336  |  
|Fashion and Leather
      Goods            | 4,194  |                         | 3,612  |   | 3,202  |  
|Perfumes and Cosmetics                     | 2,336  |                         | 2,231  |   | 2,072  |  
|Watches and Jewelry                        | 552    |                         | 548    |   | 614    |  
|Selective Retailing(1)                     | 3,337  |                         | 3,493  |   | 3,294  |  
|Other Activities
      and Eliminations(2) | 8      |                         | 113    |   | 63     |  
|                                           |        |                         |        |   |        |  
|Total                                      | 12,693 |                         | 12,229 |   | 11,581 |  
|                                           |        |                         |        |   |        |  
|                                           |        |                         |        |   |        |  
|Income from Operations                     |        |                         |        |   |        |  
|Wines and Spirits                          | 750    |                         | 676    |   | 716    |  
|Fashion and Leather
      Goods            | 1,297  |                         | 1,274  |   | 1,169  |  
|Perfumes and Cosmetics                     | 161    |                         | 149    |   | 184    |  
|Watches and Jewelry                        | (13    | )                       | 27     |   | 59     |  
|Selective Retailing(3)                     | 20     |                         | (213   | ) | (65    | )
|Other Activities
      and Eliminations(4) | (207   | )                       | (353   | ) | (104   | )
|                                           |        |                         |        |   |        |  
|Total                                      | 2,008  |                         | 1,560  |   | 1,959  |  
|                                           |        |                         |        |   |        |  

---

|(1) | For comparison
      purposes, the 2001 figure for Selective Retailing has been
      restated from the EUR 3,475 million disclosed last year,
      to reflect the re-classification of Sephora.com from being
      part of Other Activities to being included in Selective
      Retailing as of January 1, 2002.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | For comparison
      purposes, the 2001 figure for Other Activities has been
      restated from the EUR 131 million disclosed last year, to
      reflect the re-classification of Sephora.com from being
      part of Other Activities to being included in Selective
      Retailing as of January 1, 2002.     
|(3) | For comparison
      purposes, the 2001 figure for Selective Retailing has been
      restated from the EUR (194) million disclosed last year,
      to reflect the re-classification of Sephora.com from being
      part of Other Activities to being included in Selective
      Retailing as of January 1, 2002.
|(4) | For comparison
      purposes, the 2001 figure for Other Activities has been
      restated from the EUR (372) million disclosed last year,
      to reflect the re-classification of Sephora.com from being
      part of Other Activities to being included in Selective
      Retailing as of January 1, 2002.   

Wines and Spirits

In
  2002, net sales of the Wines and Spirits business group were
  slightly higher by 2% to EUR 2,266 million over 2001 (in 2001,
  net sales were EUR 2,232 million, slightly lower by 4% compared
  to 2000). Income from operations totaled EUR 750 million, up
  11% from 2001 (in 2001, income from operations were EUR 676
  million, down 6% from 2000). For an additional discussion of
  the sales performance of the Wines and Spirits business group
  in 2002, also see Item 4 Information on the Company 
  Business Overview  Wines and Spirits  (d) 2002 Highlights.

The
  main changes in the scope of consolidation of the Wines and
  Spirits business group in 2002 and 2001 were as follows:

- On May 30, 2002, LVMH sold thePommerybrand
      and certain related assets to the Vranken Monopole group.
      This structural change had a two percentage points impact
      on the growth of the Wines and Spirit business groups
      net sales. For an additional discussion of the effect of
      the sale of thePommerybrand, see also Item
      7  Financial Statements  Note 3.4
      of the Notes to the Consolidated Financial Statements.

45



---

- In July 2002, LVMH acquired
      a 40% interest in Millenium Import LLC, a company which
      markets theBelvédèreandChopinvodka
      brands in the United States and owns a vodka distillery
      in Poland. This company was consolidated in accordance with
      the equity method as of August 1, 2002.
- From January 1, 2001, theNewtonvineyards in California
      and theMount Adamvineyards in Eden Valley, Australia were incorporated
      in the Wines and Spirits business group. These structural
      changes had a negligible impact on the growth of the business
      groups net sales.

The
  following table provides certain information on the sales and
  operations of the Wines and Spirits business group over the
  past three years:

|                                                    | 2002  |   | 2001  |   | 2000  |  
|--------------------------------------------------- | ----- | - | ----- | - | ----- | -
|                                                    |       |   |       |   |       |  
|Sales volume (millions of
      bottles):           | 123.0 |   | 115.2 |   | 119.1 |  
|Champagne                                           | 53.6  |   | 49.8  |   | 53.7  |  
|Cognac                                              | 42.4  |   | 40.1  |   | 38.0  |  
|Still
      and sparkling wines                     | 27.0  |   | 25.3  |   | 27.4  |  
|                                                    |       |   |       |   |       |  
|Net sales by geographic region
      of destination |       |   |       |   |       |  
|France                                              | 12    |   | 11    |   | 10    |  
|Europe
      (excluding France)                     | 26    |   | 24    |   | 24    |  
|Americas                                            | 38    |   | 38    |   | 39    |  
|Japan                                               | 10    |   | 12    |   | 13    |  
|Asia
      (excluding Japan)                        | 12    |   | 11    |   | 11    |  
|Other
      markets                                 | 2     |   | 4     |   | 3     |  
|                                                    |       |   |       |   |       |  
|Total                                               | 100   | % | 100   | % | 100   | %
|                                                    |       |   |       |   |       |  
|Net sales (in EUR millions)                         | 2,266 |   | 2,232 |   | 2,336 |  
|                                                    |       |   |       |   |       |  
|Income from operations (in EUR
      millions)      | 750   |   | 676   |   | 716   |  
|Operating margin (as a %)                           | 33    |   | 30    |   | 31    |  
|                                                    |       |   |       |   |       |  
|Capital expenditures (in EUR
      millions)(1)     | 52    |   | 61    |   | 66    |  

---

|(1) | For 2002, includes
      the acquisition of intangible assets of EUR 2 million and
      of tangible assets of EUR 50 million, in each case, before
      accounting for variations in receivables payable on sales
      or purchases of intangible and tangible assets. For 2001,
      includes the acquisition of intangible assets of EUR 2 million
      and of tangible assets of EUR 59 million, in each case,
      before accounting for variations in receivables payable
      on sales or purchases of intangible and tangible assets.
      For 2000, includes the acquisition of intangible assets
      of EUR 3 million and of intangible assets of EUR 63 million,
      in each case, before accounting for variations in receivables
      payable on sales or purchases of intangible and tangible
      assets.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Champagne

In
  2002, net sales of champagne and wines activity reached EUR
  1,410 million, an increase of 3% as compared to 2001 and of
  7% on a comparable structural basis (excludingPommery). In
  2001, net sales of champagne and wines totaled EUR 1,372 million,
  a 9% decrease from 2000.

Income
  from operations in 2002 were EUR 422, an increase of 16% from
  2001, essentially resulting from a growth in sales volume. In
  2001, income from operations from the champagne and wines activity
  decreased by 18% over 2000 to EUR 364 million. This change was
  a result of a decline in volume sales.

In
  2002, the sales volume of all LVMH champagne brands rose 8%
  over the previous year and 14% on a comparable structural basis
  (excludingPommery), while
  shipments from the Champagne region as a whole rose by 9%. This
  change corresponded to a sales growth of 6% in France, 15% in
  the European Union excluding France, 33% in the United States
  and 5% in the rest of the world. The sales volume of all LVMH
  champagne brands was 49.8 million bottles in 2001, a 7% decline
  as compared to 2000, while shipments from the Champagne region
  as a whole rose 3.7%. This change corresponded to a sales growth
  of 9.8% in France and 1.5% in the European Union

46



---

outside France, with a decline of
  16% in the rest of the world. This temporary decline in sales
  volume in 2001 resulted from the ongoing reduction of inventories
  which had been overstocked in preparation for the Millennium
  celebrations. It also derived from the events of September 11,
  which had a negative affect on premium cuvée sales.

The
  market shares of LVMH brands in 2002 was 18.4%, on a constant
  structural basis (excludingPommery),
  an increase of 0.6% as compared to 2001 (Source: CIVC). Compared
  with 2001, sales volume for LVMH brands in 2002 increased in
  the United States, Great Britain and Japan by 33%, 20% and 5%,
  respectively, while sales in Germany and Italy declined by 13%
  and 4% respectively. In France, sales increased by 1%, or 9%
  excludingPommery.
  In 2001, the market shares of LVMH brands declined by 3.3%,
  to 18.9%. The change in LVMH sales volume was as follows: growth
  in France, Great Britain and Japan of 10%, 5% and 11%, respectively,
  while sales in the United States, Italy and Germany declined
  by 27%, 11% and 2% respectively.

The
  2002 Champagne harvest was outstanding in terms of quality and
  was slightly superior to that of 2001 as a result of anAppellation
  dOrigine Contrôléeof 12,000 kilograms per hectare (4,856 kilograms per acre),
  600 kilograms of which were placed in quality reserve. The reference
  price per kilogram of grapes for a 100% vintage was set at EUR
  4.10, a 2.5% increase from 2001. As in 2000, the 2001 harvest
  was remarkable for its quality level. TheAppellation
  dOrigine Contrôléeyield was set at 10,950 kilograms per hectare (4,431 kilograms
  per acre). The reference price per kilogram of grapes in 2001
  for a 100% vintage was set at EUR 4.00, stable in comparison
  to 2000.

Still
  and Sparkling Wines

In
  2002,the
  sales volume of still and sparkling wines was 27 million bottles,
  up 7% from 2001. This increase was due to good sales performance
  in the United States and the improvement in sales by LVMHs
  Argentine subsidiary, whose sales had declined in 2001 as a
  result of the crisis gripping that country.

In
  2001, the sales volume of still and sparkling wines was 25.2
  million bottles, down 7% from 2000. This decline was primarily
  a result of the Argentine crisis affecting sales of LVMHs
  Argentine subsidiary. The incorporation as of January 1, 2001
  ofNewtonandMountAdamresulted in a 3% growth in sales volume for the entire still
  and sparkling wines activity.

Cognac
  and Spirits

In
  2002, net sales of cognac and spirits totaled EUR 855 million,
  a slight decrease as compared to 2001 due to a negative foreign
  exchange effect (in 2001, net sales totaled EUR 860 million,
  an increase of 3% compared to 2000).

Income
  from operations at EUR 328 million, represented a 5% increase
  from 2001 (in 2001, income from operations were EUR 312 million,
  a 15% increase from 2000).

2002
  was marked by sales volume growth of 6% but performances in
  various markets were mixed: growth of 13% in mainland China
  and 5% growth in the United States, where the business continued
  to perform well, while declining sales continued in Japan with
  a 18% drop. Sales of vintage cognac and spirits continued at
  a faster pace than younger qualities, a reversal of the trend
  seen in 2000 and 2001. 2001 was marked by new growth in sales
  volume of 6% and market by market, changes were contrasting:
  growth remained strong in the United States with an increase
  of 10% over 2000, while declining sales continued in Japan with
  a 12% fall as compared to 2000. Sales in 2001, of quality aged
  products (V.S.O.P and X.O) continued the recovery noted in 2000.

In
  2002, total Cognac region shipments increased 5% in comparison
  to 2001, while shipments of LVMH brands increased by 6%. LVMH
  market share was thus 37.7%, up 0.3 percentage points over 2001.
  In 2001, total Cognac region shipments remained stable compared
  to 2000, while shipping volumes of LVMH brands increased by
  1%. LVMH market share in 2001 was thus 37.4%, an increase of
  0.4 percentage points over 2000.

Fashion
  and Leather Goods

The
  following table provides certain information on the sales and
  operations of the Fashion and Leather Goods business group over
  the past three years:

47



---

|                                                | 2002  |   | 2001  |   | 2000  |  
|----------------------------------------------- | ----- | - | ----- | - | ----- | -
|                                                |       |   |       |   |       |  
|Net sales by geographic region
      of         |       |   |       |   |       |  
|destination                                     |       |   |       |   |       |  
|France                                          | 10    |   | 11    |   | 11    |  
|Europe
      (excluding France)                 | 16    |   | 14    |   | 14    |  
|Americas                                        | 24    |   | 19    |   | 17    |  
|Japan                                           | 33    |   | 36    |   | 37    |  
|Asia
      (excluding Japan)                    | 15    |   | 18    |   | 19    |  
|Other
      markets                             | 2     |   | 2     |   | 2     |  
|                                                |       |   |       |   |       |  
|Total                                           | 100   | % | 100   | % | 100   | %
|                                                |       |   |       |   |       |  
|Net sales (in EUR millions)                     | 4,194 |   | 3,612 |   | 3,202 |  
|                                                |       |   |       |   |       |  
|Income from operations (in EUR
      millions)  | 1,297 |   | 1,274 |   | 1,169 |  
|Operating margin (as a %)                       | 30    |   | 35    |   | 37    |  
|                                                |       |   |       |   |       |  
|Capital expenditures (in EUR
      millions)(1) | 246   |   | 210   |   | 194   |  

---

|(1) | For 2002, includes
      the acquisition of intangible assets of EUR 45 million and
      of tangible assets of EUR 201 million, in each case, before
      accounting for variations in receivables payable on sales
      or purchases of intangible and tangible assets. For 2001,
      includes the acquisition of intangible assets of EUR 30
      million and tangible assets of EUR 180 million, in each
      case, before accounting for variations in receivables payable
      on sales or purchases of intangible and tangible assets.
      For 2000, includes intangible assets of EUR 25 million and
      tangible assets of EUR 169 million, in each case, before
      accounting for variations in receivables payable on sales
      or purchases of intangible and tangible assets.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In
  2002, net sales of the Fashion and Leather Goods business group
  totaled EUR 4,194 million, an increase of 16% over 2001 (in
  2001, net sales were EUR 3,612 million, an increase of 13% over
  2000).

Income
  from operations totaled EUR 1,297 million, up 2% from the 2001
  level (in 2001, income from operations was EUR 1,274 million,
  up 9% from the 2000 level). For an additional discussion of
  the sales performance of the Fashion and Leather Goods business
  group in 2002, also see Item 4 Information on the Company
   Business Overview  Fashion and Leather Goods 
  (f) 2002 Highlights.

The
  effect of changes in the scope of consolidation of the Fashion
  and Leather Goods business group in 2002 and 2001 were as follows:

- In 2002,Fendiwas consolidated in
      the Fashion and Leather Goods business group for the full
      year; after a proportionate consolidation in 2001. In 2002,Donna Karan Internationalwas also consolidated
      in this business group, whereas in 2001, only theDonna
      Karanbrand licensing fees paid byDonna
      Karan Internationalto
      Gabrielle Studio were recognized. Sales in 2002 increased
      5% on a comparable structural and currency basis.
- In 2001, the Fashion and Leather
      Goods business group benefited from the proportionate consolidation
      of 51% ofFendiincome
      over twelve months instead of six months only in 2000. Royalties
      paid byDonna Karan
      Internationalto Gabrielle
      Studio as a license for theDonna
      Karanbrand were also
      included in this business group in 2001. Finally, the sales
      from the Japanese distributor ofKenzoare included as of
      January 1, 2001. Excluding these effects sales growth in
      2001 was 8%, and 11% on a comparable structural and currency
      basis.

In
  2002,Louis Vuittonreported a 2% increase in volume, but overall sales suffered
  from the negative effects of the events of September 11, 2001
  on tourist travel to destinations in the Pacific. Nevertheless,Louis Vuittonposted another good year because of sales in Japan and the United
  States, which increased 15% and 12% respectively. In 2001, despite
  the negative effects of the events of September 11, 2001 on
  travel to the tourist regions in the Pacific, and because of
  strong growth in other markets, particularly in Japan, with
  growth of 18% in yen,Louis
  Vuittonagain had a very
  good year, with overall sales volume having increased by 10%
  over 2000. At year-end 2002, theLouis Vuittonretail network had 299 stores, including 42 global stores, an
  increase of seven stores over 2001 (at year end 2001, theLouis
  Vuittondistribution network totaled 292 stores,
  36 of which were global stores, representing a network
  growth of 8 stores compared to the year 2000).

48



---

In
  2002,Fendicompleted the restructuring of its retail network, which now
  includes 84 stores; it also began restructuring its production
  facilities. In 2001,Fendisharply increased its sales through a purchase of distributors
  and the development of its network of stores, which numbered
  84 at year-end 2001 compared to 17 at year-end 2000.

In
  2002,Donna Karan Internationalbegan revamping its organization, which has already had a significant
  effect on 2002 earnings. Cost cuts were rapidly achieved in
  logistics, administration and sales. The retail network organized
  around the new strategy includes 49 directly owned stores.

On
  a comparable currency basis, sales byLoeweandCélinein 2002 were up as both companies performed
  well on the Japanese market. In 2001, although these two brands
  suffered the effects in the last quarter of 2001 of the events
  of September 11th, their
  sales increased in 2001 as a whole.

In
  2002,Loewecontinued to concentrate on growing its leather goods and accessories
  lines. Its retail network included 89 stores at year-end 2002
  as compared to 94 points of sale in 2001, which was stable in
  comparison to 2001.

In
  2002,Célinecontinued to expand its ready-to-wear line based on a line of
  handbags with a proven record of success.Célinenow manages 89 directly owned stores worldwide, as compared
  to 97 points of sale in 2001.

Kenzohad a less favorable year in 2002 in terms of sales. As of January
  1, 2001,Kenzotook over the activities of its womens ready-to-wear
  distributor in Japan, thereby taking direct control of a network
  of 26 stores. The total number ofKenzostores at year-end 2001 was 54.

The
  number ofChristian Lacroixlicenses continued to increase, and the high-fashion segment
  performed very well in 2002. In 2001,Christian
  Lacroixdeveloped licenses,
  in particular with a new ready-to-wear licensee in Japan. These
  licenses contributed to a sharp growth inChristian Lacroixsales in 2001 as compared to 2000.

In
  2002,Givenchycontinued to restructure its brand licenses, which weighed on
  sales. However, the companys expanding ready-to-wear lines
  proved popular. In 2001,Givenchysales increased significantly as a result of the success of
  its ready-to-wear lines and accessories.

Sales
  forMarc Jacobsrose by over 40% in 2002 on a constant currency basis because
  of the popularity of its products with U.S. and Japanese customers.
  In 2001, theMarc Jacobslines experienced strong growth in the United States and Japan.

In
  2002, sales byThomas Pinkrose by 7% on a constant currency basis. Its retail network
  expanded from 36 stores in 2001 (primarily located in Great
  Britain and in the United States) to 39 stores in 2002, notably
  including store openings in the United States. In 2001,Thomas
  Pinksuccessfully developed
  its men and womens lines.

Berlutiopened two stores in 2002 and now owns eight, which explains
  a sharp increase in its sales. In 2001,Berlutiexperienced
  strong sales growth in its six existing stores.

In
  2002,Pucciexpanded its collections and increased its sales in line with
  objectives. In 2001,Pucciacquired
  its distributor Casor, as a means of obtaining future growth.

Perfumes and Cosmetics

The
  following table provides certain information on the sales and
  operations of the Perfumes and Cosmetics business group over
  the past three years:

|                              | 2002 |   | 2001 |   | 2000 |  
|----------------------------- | ---- | - | ---- | - | ---- | -
|                              |      |   |      |   |      |  
|Net sales by product category |      |   |      |   |      |  
|Perfumes                      | 62   |   | 61   |   | 61   |  
|Make-up                       | 21   |   | 22   |   | 21   |  
|Beauty care
      products    | 17   |   | 17   |   | 18   |  
|                              |      |   |      |   |      |  
|Total                         | 100  | % | 100  | % | 100  | %
|                              |      |   |      |   |      |  

49

---

|                                                    | 2002  |   | 2001  |   | 2000  |  
|--------------------------------------------------- | ----- | - | ----- | - | ----- | -
|                                                    |       |   |       |   |       |  
|Net sales by geographic region
      of destination |       |   |       |   |       |  
|France                                              | 20    |   | 20    |   | 21    |  
|Europe
      (excluding France)                     | 35    |   | 31    |   | 30    |  
|Americas                                            | 25    |   | 28    |   | 27    |  
|Japan                                               | 7     |   | 7     |   | 8     |  
|Asia
      (excluding Japan)                        | 8     |   | 8     |   | 8     |  
|Other
      markets                                 | 5     |   | 6     |   | 6     |  
|                                                    |       |   |       |   |       |  
|Total                                               | 100   | % | 100   | % | 100   | %
|                                                    |       |   |       |   |       |  
|Net sales (in EUR millions)                         | 2,336 |   | 2,231 |   | 2,072 |  
|                                                    |       |   |       |   |       |  
|Income from operations (in EUR
      millions)      | 161   |   | 149   |   | 184   |  
|Operating margin (as a %)                           | 7     |   | 7     |   | 9     |  
|                                                    |       |   |       |   |       |  
|Capital expenditures (in EUR
      millions)(1)     | 75    |   | 90    |   | 83    |  

---

|(1) | In 2002, includes
      acquisitions of intangible assets of EUR 14 million and
      tangible assets of EUR 61 million, in each case, before
      accounting for variations in receivables payable on sales
      or purchases of intangible and tangible assets. In 2001,
      includes acquisition of intangible assets of EUR 12 million
      and of tangible assets of EUR 78 million, in each case,
      before accounting for variations in receivables payable
      on sales or purchases of intangible and tangible assets.
      In 2000, includes acquisition of intangible assets of EUR
      11 million and of tangible assets of EUR 72 million, in
      each case, before accounting for variations in receivables
      payable on sales or purchases of intangible and tangible
      assets.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In
  2002, the Perfumes and Cosmetics business group reported net
  sales of EUR 2,336 million, up 5% (8% on a comparable currency
  basis) over 2001. This increase in sales proved more robust
  in the last quarter of 2002 reaching 7% (12% on a comparable
  currency basis) as compared to 2001. Growth was driven by new
  products like the womens fragrance Dior Addict, new make-up
  lines, and by the continued popularity ofDiors
  JAdoreand
  Flower byKenzo.
  Sales byChristian Dior,GivenchyandKenzorose, while sales byGuerlainwere slightly down from 2001 because the company did not roll
  out any new products. In 2001, the Perfumes and Cosmetics business
  group reported net sales of EUR 2,231 million, up 8% over 2000:
  sales growth of the four perfume houses was favored by the successful
  launch of a number of new products such as the mens perfume
  Higher andDiors
  Addict lipstick, by the success ofKenzos
  Flower in foreign markets and the continuing excellent performance
  ofDiors
  JAdore. For an additional discussion of the sales and
  operating performance of the Perfumes and Cosmetics business
  group in 2002, also see Item 4 Information on the Company
   Business Overview  Perfumes and Cosmetics 
  (d) 2002 Highlights.

In
  2002, on a market by market basis, 9% growth in sales was recorded
  in Japan in yen and 14% growth in Asia (excluding Japan). Growth
  proved more moderate in France and Europe, and amounted to 4%
  in the United States in U.S. dollars. Sales by the recently
  acquired U.S. companiesBliss,BeneFit,Fresh,Urban DecayandHard Candyrose 9% on a constant currency basis. In 2001, growth
  in Europe was sustained: growth in France was 6%; in Italy 7%;
  in Great Britain 6%; in Germany 9%. In the United States, where
  sales were less favorable at the end of the year, net sales
  were approximately the same as in 2000, as well as in Asia (excluding
  Japan), despite the decline in tourist travel. In Japan, sales
  expressed in yen also remained stable.

In
  2002, in the United States, the licensed perfume of designerKenneth Colewas launched at the end of the year, joining the perfumes of
  designersMichael KorsandMarc Jacobs,
  which reported strong sales in Europe and Asia. In May 2003,
  LVMH sold itsMichael Korsfragrance and beauty products business and related license agreement
  to Aramis Inc., a subsidiary of Estee Lauder and signed a contract
  to sell itsMarc JacobsandKenneth Colefragrance and beauty products businesses and related license
  agreements to Coty Inc. In 2001, within a difficult context,
  the U.S. cosmetics companies that were acquired in 1999 and
  2000 achieved remarkable growth of 16% on a constant structural
  basis.

The
  effects of changes in the scope of consolidation of the Perfumes
  and Cosmetics business group in 2002 and 2001 were as follows:

50



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- Parfums Loewe,
      previously consolidated within the Fashion and Leather Goods
      business group, rejoined the Perfumes and Cosmetics business
      group in 2002.
- In 2002, in order to concentrate
      on its top performers, LVMH sold U.S. start-upsUrban
      DecayandHard
      Candy.
- From January 1, 2001, the Perfumes
      and Cosmetics business group included the U.S. companyFresh,
      a developer and distributor of skin care products. This
      structural change had a minor impact on the business groups
      revenue level.

The
  overall income from operations for the Perfumes and Cosmetics
  business group totaled EUR 161 million, an 8% increase in comparison
  to 2001 (in 2001, income from operations were EUR 149 million,
  a decrease of 19% in comparison to 2000). The increase in 2002
  resulted from the improvement of sales margins as well as good
  management of commercial and administrative charges while investments
  in communications increased in comparison to 2001. The decline
  noted in 2001 resulted from weak sales in the United States
  and Asian markets at the end of the year, as a result of slowdown
  in travel retail and difficult conditions in the United States
  related to the events of September 11, 2001 and from the ongoing
  long-term and necessary communication expenses incurred in the
  fourth quarter.

Watches
  and Jewelry

The
  following table provides certain information on the sales and
  operations of the Watches and Jewelry business group over the
  past three years:

|                                                      | 2002 |   | 2001 |   | 2000 |  
|----------------------------------------------------- | ---- | - | ---- | - | ---- | -
|                                                      |      |   |      |   |      |  
|Net sales by geographic region
      of destination   |      |   |      |   |      |  
|France                                                | 8    |   | 7    |   | 8    |  
|Americas                                              | 28   |   | 29   |   | 30   |  
|Japan                                                 | 14   |   | 13   |   | 11   |  
|Asia
      (excluding Japan)                          | 12   |   | 10   |   | 9    |  
|Other
      markets                                   | 38   |   | 41   |   | 42   |  
|                                                      |      |   |      |   |      |  
|Total                                                 | 100  | % | 100  | % | 100  | %
|                                                      |      |   |      |   |      |  
|Net sales (in EUR millions)                           | 552  |   | 548  |   | 614  |  
|                                                      |      |   |      |   |      |  
|Income (loss) from operations
      (in EUR millions) | (13  | ) | 27   |   | 59   |  
|Operating margin (as a %)                             | (2   | ) | 5    |   | 10   |  
|                                                      |      |   |      |   |      |  
|Capital expenditures (in EUR
      millions)(1)       | 31   |   | 26   |   | 16   |  

---

|(1) | Includes acquisitions
      of intangible assets of EUR 4 million and of tangible assets
      of EUR 27 million, in each case, before accounting for variations
      in receivables payable on sales or purchases of intangible
      and tangible assets. For 2001, includes acquisitions of
      intangible assets of EUR 10 million and of tangible assets
      of EUR 16 million, in each case, before accounting for variations
      in receivables payable on sales or purchases of intangible
      and tangible assets. In 2000, includes acquisitions of intangible
      assets of EUR 2 million and of tangible assets of EUR 14
      million, in each case, before accounting for variations
      in receivables payable on sales or purchases of intangible
      and tangible assets.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In
  2002, the Watches and Jewelry business group reported net sales
  of EUR 552 million, an increase of 1% from 2001 (in 2001, net
  sales were EUR 548 million, an 11% decline from 2000). The 2002
  sales reflected a lower production volume for third party brands.
  For LVMH brands alone, the increase in net sales was 4%. In
  2001, the decrease in sales was primarily attributable to the
  shutdown of subcontract manufacturing for competing brands.
  In addition, sales to the United States suffered a blow in the
  last quarter as a consequence of the events of September 11.
  For an additional discussion of the sales performance of the
  Watches and Jewelry business group in 2002, also see Item 4
  Information on the Company  Business Overview 
  Watches and Jewelry  (d) 2002 Highlights.

The
  effect of changes in the scope of consolidation of the Watches
  and Jewelry business group were as follows:

51



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- As of January 1, 2001, this
      business group included the Italian companyOmas,
      a luxury pen manufacturer and the joint venture withDe Beerswhich
      was implemented in 2001. Since theDe
      Beersjoint ventures
      commercial activities did not begin until 2002, the expenses
      of this entity were included under other income and expenses
      in 2001.

In
  2002, the growth inTAG
  Heuersales was driven
  by the relaunching of the designer labels Monza, Monaco and
  Carrera; sales byZenithbenefited from the popularity of its lines of high-end watches
  at the Basle trade show;Ebels sales were down slightly, chiefly because
  of the sluggish economy in Germany and in the United States
  at the end of the year; and sales ofChristian
  Diorwatches rose sharply
  in 2002 thanks to more aggressive marketing and the introduction
  of two new models. In addition, in 2002,Chaumetstepped up its activities in Japan, where its jewelry line has
  proven very popular. TheChaumetretail network is now made up of 22 stores and directly owned
  shop in the shop; the success of the newly launched
  Move 1 watch fromFredhelped to boost brand sales; andOmasrestructured its industrial plant and began developing a new
  line of pens. Finally, retail sales by theDe
  Beersjoint venture began
  with the opening in November 2002 of a store in London.

In
  2001 the Watches and Jewelry business group continued to strengthen
  its commercial organization in various world markets by improving
  logistics, customer service and administration and implementing
  common resources. Finally, manufacturing was improved by strengthening
  the business groups production capacity and technological
  resources. In 2001, the redefinition of product lines of all
  Watches and Jewelry brands was completed, allowing a consistent
  offering to clients.

The
  Watches and Jewelry business group posted a loss from operations
  of EUR 13 million in 2002, compared with income of EUR 27 million
  in 2001. Income from operations totaled EUR 27 million compared
  to EUR 59 million in 2000, a decrease of 54%. In 2002, this
  decline was attributable to the sharp drop in production activities
  for non-LVMH brands and to an increase in marketing expenditures
  for LVMH brands.

Selective
  Retailing

The
  following table provides certain information on the sales and
  operations of the Selective Retailing business group over the
  past three years:

|                                                    | 2002  |   | 2001  |   | 2000  |  
|--------------------------------------------------- | ----- | - | ----- | - | ----- | -
|                                                    |       |   |       |   |       |  
|Net sales by geographic region
      of destination |       |   |       |   |       |  
|France                                              | 26    |   | 25    |   | 21    |  
|Europe (excluding
      France)                     | 9     |   | 8     |   | 6     |  
|United States                                       | 37    |   | 36    |   | 39    |  
|Asia                                                | 23    |   | 26    |   | 29    |  
|Other markets                                       | 5     |   | 5     |   | 5     |  
|                                                    |       |   |       |   |       |  
|Total                                               | 100   | % | 100   | % | 100   | %
|                                                    |       |   |       |   |       |  
|Net sales (in EUR millions)                         | 3,337 |   | 3,493 |   | 3,294 |  
|                                                    |       |   |       |   |       |  
|Income from operations (in EUR
      millions)      | 20    |   | (213  | ) | (65   | )
|                                                    |       |   |       |   |       |  
|Capital expenditures (in EUR
      millions)(1)     | 75    |   | 207   |   | 299   |  

---

|(1) | In 2002, includes acquisitions
      of intangible assets of EUR 10 million and of tangible assets
      of EUR 65 million, in each case, before accounting for variations
      in receivables payable on sales or purchases of intangible
      and tangible assets. In 2001, includes acquisitions of intangible
      assets of EUR 20 million and of tangible assets of EUR 187
      million, in each case, before accounting for variations
      in receivables payable on sales or purchases of intangible
      and tangible assets. In 2000, includes acquisitions of intangible
      assets of EUR 17 million and of tangible assets of EUR 282
      million, in each case, before accounting for variations
      in receivables payable on sales or purchases of intangible
      and tangible assets.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In
  2002, the Selective Retailing business group reported net sales
  of EUR 3,337 million, a decrease of 4% over 2001 (in 2001, net
  sales were EUR 3,493 million, a 6% increase over 2000). For
  an additional discussion of the sales performance of the Selective
  Retailing business group in 2002, also see Item 4 Information
  on the Company Business Overview  Selective Retailing
   (c) 2002 Highlights.

52



---

The
  effect of changes in the scope of consolidation of the Selective
  Retailing business group in 2002 and 2001 were as follows:

- In addition toDFS,Miami Cruiseline,Le Bon Marché,La Samaritaine,
      and all ofSephoras business in Europe and the United States,
      this business group now includes theSephora.comwebsite, which in 2001
      was consolidated with the Other Activities business group.
- From January 1, 2001, this business
      group included the Parisian department storeLa
      Samaritaine. The consolidation
      of this company contributed 4% to net sales growth.

The
  decline in 2002 sales for the Selective Retailing business group
  was primarily the result of a 9% drop on a constant currency
  basis in sales byDFSIn
  2002, the Singapore Galleria was opened, rapidly draining a
  large number of customers, both tourists and local residents.DFSbegan reducing structural costs at year-end 2001; this had a
  full-year effect in 2002, and contributed to a slight profit
  at year-end 2002. In 2001,DFSsales declined by 10% compared to 2000. The events of September
  11, 2001 had a strong impact onDFSperformance in the final quarter of 2001, particularly on its
  sales in the tourist regions of Hawaii, Guam and Saipan, and
  Las Vegas, San Francisco and Los Angeles in the United States.
  Income from operations, which was near break-even at the end
  of September 2001, thus declined to negative figures by year-end
  2001. A decision was quickly made to close points of sale that
  had become structurally loss-making, such as those in Las Vegas
  and Union Square in San Francisco. A large-scale restructuring
  was undertaken, which allowed a reduction in the businesss
  fixed operating costs. These restructuring costs had been posted
  in 2001 under unusual items.For a further discussion of
  this restructuring, see Notes 11 and 28 of the Consolidated
  Financial Statements.

In
  2002, sales byMiami Cruiseline
  Servicesincreased by 7%
  in local currency. After declining fourth quarter 2001 sales
  attributable to the events of September 11, travel on the cruise
  ships on whichMiami Cruiselineoperates shops increased substantially in 2002.

Sephoras
  sales in Europe and the United States rose 8% in 2002. Sales
  rose dramatically in the United States, with a 28% increase
  in dollars. TheSephora.comwebsite operating in the United States now included in this
  business segment reported 50% growth in sales in 2002. In 2001,Sephoraconsolidated
  its positions in Europe and the United States with revenue growth
  of 23% on a constant currency and structural basis.

The
  number of stores managed bySephoratotaled 476 by the end
  of 2002 (468 at year-end 2001). The leading countries in terms
  of number of stores were France with 181 stores (177 at year-end
  2001), followed by Italy with 108 (107 at year-end 2001), the
  United States with 72 (72 at year-end 2001), Greece with 42
  (40 at year-end 2001), Poland with 31 (27 at year-end 2001)
  and Spain with 18 (17 at year-end 2001). In 2001, in Japan and
  Germany LVMH decided to close all points of sale, as these markets
  had not proven to be profitable. In the United States, where
  sales increased by 14% on a constant-store basis, commercial
  restructuring measures taken, to reduce the networks fixed
  expenses. These restructuring costs were posted under unusual
  items.

In
  2002,Le Bon Marchécontinued to attract new consumers on a regular basis, reporting
  a 4% increase in sales. Sales byLa
  Samaritainewere down from
  2001 after certain unprofitable departments were shut down and
  replaced by men and womens ready-to-wear departments.
  In 2001,Le Bon Marchés
  growth in sales continued in comparison to 2000, thereby demonstrating
  the appropriateness of the distribution concept implemented
  by that store. In turn,La
  Samaritainebegan in 2001,
  a process of renovation, as a means of obtaining growth.

The
  Selective Retailing business group reported operating income
  of EUR 20 million, as compared to a loss of EUR 213 million
  in 2001 (a sharp decline from 2000).

Other
  Activities

In
  2002, this business group included the media unit managed by
  D.I. Group (formerly Desfossés International), the eLuxury
  website business, which was fully consolidated in 2002 after
  being consolidated as a 50% equity affiliate in 2001, theTajanfirm consolidated from January 1, 2002, and theArt
  & Auctionmagazine
  business. In 2002, this business group also included thePhillipsauction house business. In addition, headquarters expenses and
  the elimination of intra-group sales and margins especially,
  among businesses in the Selective Retailing business group were
  included in this category. In 2001, Other Activities also included
  the e-commerce site Sephora.com.

53



---

In 2002, Other Activities
  reported net sales of EUR 8 million (in 2001, net sales were
  EUR 113 million, a 79% increase over 2000).

In
  2002, the D.I. Group media sales byLa
  TribuneandInvestirwere down from 2001. This decline is due
  to a reduction of more than 20% in advertising revenues. Distribution
  fell less dramatically because, in the case ofLa
  Tribune, of the introduction of a new format in the second
  half of 2002. Sales byRadio
  ClassiqueandSid
  Editionspublisher of Défis magazine, held
  steady in 2002. In 2002, the new format of Connaissance des
  Arts, which was recently consolidated within the D.I. Group,
  led to better circulation and an increase in advertising revenues.
  TheSystem TVcompany, which specializes in audio-visual productions, posted
  higher sales in 2002. The 33% interest owned by LVMH in LV &
  Co (MFM and FM radio stations) was sold in the second half of
  2002 under favorable terms. Total sales for the D.I. Group were
  down 12% from 2001. In 2001, D.I. Group expanded the product
  offer of each of its media in order to offer a broad audience
  of decision-makers a complete publishing line, particularly
  coverage of economic and financial news. The media companiesLa Tribune,InvestirandRadio Classiquesaw their advertising revenue decline in the second half of
  2001 as a result of the economic slowdown. However, the activity
  levels of Défis magazine and System TV were not affected,
  and Jazzman and Le Monde de la Musique, both leaders in their
  field, increased their circulation in 2001. Certain interests
  taken in 1999 and 2000 in the video domain were depreciated
  in 2001.

In
  January 2001, LVMH transferred the Victoire Multimedia business
  to Jet Multimedia group in exchange for 479,125 shares in Jet
  Multimedia with a guaranteed price. This disposal gave rise
  to a capital gain of EUR 25 million before taxes.

The
  net income for the D.I. Group was negative in 2001. Management
  took measures to cut costs without sacrificing the quality of
  its written and musical offerings, which limited the increase
  in operating losses suffered by that business in 2002.

e-Luxury,
  the web site for luxury goods, had been successfully launched
  in the second half of 2000. In December 2001, the 50% stake
  in e-Luxury had been increased to 99.99%, through subscription
  to a capital increase, thus giving rise to goodwill of EUR 45
  million, corresponding to the value of the clientele and prior
  site development costs. e-Luxury was accounted for using
  the equity method as of January 1, 2001 and was fully consolidated
  at December 31, 2001. In 2002, e-Luxury, the luxury products
  sales website in the United States, emerged as the leading company
  in this market with an increase in sales of 47 % over 2001.

Based
  on an agreement of May 2002, LVMHs interest inPhillipswas reduced from 75% to 27.5%, and its controlling interest
  was sold to the companys former directors, Daniella Luxembourg
  and Simon de Pury. This decision was in line with the strategy
  of Phillips, de Pury & Luxembourg, which was not targeting
  size but was focusing on the quality of its offerings. The transaction
  also reflected LVMHs desire to concentrate on the development
  of luxury products. Thus, it was logical and practical for the
  companys two principals to take effective control at that
  time. The impact of this agreement on LVMHs December 31,
  2001 financial statements was a total expense of EUR 141 million
  recorded as unusual items. This amount mainly represented the
  full depreciation of the previously recorded goodwill. Within
  the scope of this agreement, LVMH restored in 2002 thePhillipsgroups financial situation by cancelling its debt. In
  return, LVMH receivedPhillips
  fixed assets and inventories.Phillipswas deconsolidated as from January 1, 2002, as its activity
  over the first few months of the year was not significant.

In
  a tough auction sales market, in 2002 Tajan, acquired late in
  2001 and consolidated as from January 1, 2002 emerged as the
  top auction house in France.

Other
  Activities reported an operating loss of EUR 207 million (in
  2001, EUR 353 million, a decline of 239% from 2000).

Investments

LVMHs
  investment strategy is focused on the development of brands.
  This strategy is implemented through the acquisition of brands
  with strong potential and the development of existing LVMH brands.
  Selective retailing brands are also acquired and developed,
  as long as such acquisitions present synergies with existing
  brands particularly in terms of distribution control.

54



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LVMH
  brand acquisitions completed over the past three years are discussed
  in detail in Item 17  Financial Statements
  Note 3 to the Consolidated Financial Statements. The major acquisitions
  during this period are noted below by business group:

- in the Fashion and Leather Goods
      business groupThomas
      Pink,FendiandDonna
      Karan Internationalwere
      acquired;
- in the Watches and Jewelry business
      groupTAG Heuer,Ebel,
      Zénith andChaumetwere acquired which
      allowed LVMH to establish the Watches and Jewelry business
      group;
- in the Selective Retailing business
      groupLa Samaritaineand various perfume
      and cosmetics retailers (Boidi and Carmen in Italy, Beauty
      Shop in Greece) were acquired.

The ownership of brands, particularly
  prestigious brands, requires constant capital expenditures in
  two areas:

- communication, for maintaining
      or developing brand image and gaining market share, and
- research and development, particularly
      in the Wines and Spirits and Perfumes and Cosmetics business
      groups.

Over
  the past three years, communication expenses represented a total
  of EUR 3,698 million with EUR 1,443 million spent in 2002, EUR
  1,371 million spent in 2001 and EUR 1,331 million in 2000. These
  expenses essentially correspond to the costs of advertising
  campaigns, especially for new product launches.

Costs
  related to research and development activities, incurred during
  this period totaled EUR 84 million.

In
  addition to investments in the intangible assets represented
  by brands, LVMHs primary operating capital expenditures
  focus on the development of its retail network and manufacturing
  units. Stores are owned by the Fashion and Leather Goods business
  group, which partially, or exclusively in the case ofLouis
  Vuitton, assume their own
  distribution; by the Selective Retailing business group; and
  to a more limited extent, by the Perfumes and Cosmetics and
  Watches and Jewelry business groups. Other than Selective Retailing,
  all business groups include production units. Operating investments
  represented EUR 2.4 billion over the past three years.

LIQUIDITY AND
  CAPITAL RESOURCES

During
  2002, the main areas of focus of LVMHs financial policy
  were as follows:

|• |  | Reduction
      of liabilities and consolidated financial debt. Thus, LVMH
      sold off treasury shares,Pommeryshares, various non-consolidated
      long-term investments, and several properties. Combined
      with the substantial funds generated in 2002 by operations,
      these sales significantly reduced consolidated debt, beyond
      the forecasts made early in the year. Thus, net long-term
      debt was reduced by 22% in 2002, from EUR 8,272 million
      at year-end 2001 to EUR 6,483 million at year-end 2002.                                                                                                                                                  
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|• |  | Improvement
      of financial structure based on the following key indicators:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|• |  | A prudent
      foreign exchange and interest rate risk policy designed
      chiefly for hedging the risks generated directly and indirectly
      by LVMHs operations or investments. Regarding currency
      risks, LVMH continued to favor hedges on exporting companies
      in the form of call options or tunnels, which can limit
      the negative impact if a currency falls while retaining
      the upside if the currency rises. Despite the weakness in
      the U.S. dollar, this strategy was used successfully to
      obtain hedge rates for the U.S. dollar and the Japanese
      yen that were generally more advantageous than the average
      rates for the year.

55



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- Publication of Standard &
      Poors long-term rating of BBB+ for LVMH, in addition
      to the A-2 short-term rating published for a number of years.
      In a volatile and troubled financial environment, this additional
      transparency without even a public bond issue was welcomed
      by the market.
- Full compliance with financial
      covenant ratios. As is the standard practice for syndicated
      loans, LVMH made commitments to comply with certain financial
      ratios. Based historically on gearing (the ratio
      of net debt to shareholders equity), these ratios
      now involve leverage  (the ratio of debt to
      EBITDA). These ratios are currently far below the critical
      thresholds, so that LVMH enjoys a wide degree of financial
      flexibility with respect to these commitments.
- Reduction of financial expense.
      Net financial expense declined considerably in 2002 amounting
      to EUR 294 million, a 36% reduction from EUR 459 million
      in 2001. This reduction is due to a decrease of slightly
      more than 10% in average net debt and, especially, to a
      decline in interest rates, notably on the U.S. dollar. LVMH
      benefited from falling interest rates in 2002 thanks to
      an interest-rate management policy with strong emphasis
      on floating rate loans combined, where applicable, with
      options instruments designed to take advantage of favorable
      trends while offering protection from any pronounced adverse
      movements.
- A dynamic policy of dividend
      payments to shareholders, reflecting LVMHs confidence
      in the future. An interim dividend of EUR 0.22 was paid
      in December 2002; and a dividend (excluding the dividend
      tax credit) of EUR 0.80 per share was paid for the period,
      up 6.7% over the previous year. Thus, total dividend payments
      to shareholders by LVMH amounted to EUR 392 million for
      the year 2002, before the effect of treasury shares.

Consolidated Statements of Cash
  Flows  2002

The
  consolidated statement of cash flows, included in the consolidated
  statements, details the major financial flows for the year.

Net
  cash provided in 2002 by operating activities before changes
  in current assets and liabilities amounted to EUR 1,518 million,
  compared with EUR 919 million one year earlier, an increase
  of 65%. This change is due primarily to the increase in net
  income.

A
  change in working capital requirements in 2002 generated financial
  resources of EUR 436 million. This performance is due to disciplined
  management of inventories and customer accounts, especially
  in the Fashion and Leather Goods and Perfumes and Cosmetics
  business groups. Trade payables also contributed a positive
  EUR 82 million to changes in cash flow.

In
  2002, total cash provided by operating activities amounted to
  EUR 1,954 million, far more than the EUR 574 million figure
  for 2001.

Net cash used in investing activities
  amounted to EUR 724 million in 2002.

In
  2002, operating investments represented a cash outlay of EUR
  559 million (including acquisitions of intangible assets of
  EUR 80 million and tangible assets of EUR 479 million), compared
  with EUR 984 million (including acquisitions of intangible assets
  of EUR 80 million and tangible assets of EUR 904 million) in
  2001. The 43% reduction from last year reflects the fact that
  non-recurring real estate acquisitions which occurred in 2001
  were not renewed, as well as an increased selectivity in investments,
  and a focus on LVMH key brands, starting with Louis
  Vuitton.

In
  2002, financial investments (acquisitions of other investments
  and changes in other non-current assets) represented EUR 274
  million for the year, and the remaining net effects of changes
  of consolidated companies accounted for EUR 160 million. In
  particular, the effects on LVMHs cash position of the
  scheduled payment for thePradastake inFendiamounted to EUR 180 million and, together with the amount devoted
  to the acquisition of Millennium Import LLC, exceeded the proceeds
  from the sale ofPommery.

56



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Conversely,
  sales of fixed assets (non-financial assets and un-consolidated
  investments) had a positive impact of EUR 269 million on cash
  flow in 2002. This sum was generated primarily by the sale of
  real estate assets and of shares in Fininfo, Marnier Lapostolle
  and Gant.

Disposals
  of treasury Shares by LVMH, net of acquisitions, generated an
  inflow of EUR 516 million, compared with a disbursement of EUR
  13 million in the previous year.

At
  the same time, capital increases by LVMH, paid for by minority
  shareholders, generated inflows of EUR 13 million.

Dividends
  paid in 2002, excluding these related to treasury shares, totaled
  EUR 349 million, including EUR 246 million paid out in June
  for the remainder of the 2001 dividend, and EUR 103 million
  in December as an interim dividend for 2002. In addition, the
  minority shareholders of the consolidated subsidiaries received
  EUR 23 million in dividends.

After
  all operating and investing activities and after payment of
  dividends, surplus cash amounted to EUR 1,387 million.

This
  largely positive balance enabled LVMH to amortize loans and
  long-term debt in very substantial amounts (a total of EUR 2,408
  million) and to limit new loans and long-term borrowings.

Bond
  issues and subscriptions and long-term debt generated EUR 523
  million. LVMH continued to diversify its investor base and to
  take advantage of medium-term private placement opportunities
  up to EUR 236 million within its Euro Medium Term Notes program.

Debt
  reduction focused primarily on short-term debt, with commercial
  paper outstandings reduced by EUR 1,390 million during the year.

At
  the end of the year, cash and cash equivalents totaled EUR 544 million.

LVMH
  believes that working capital is sufficient for its present
  requirements: cash on hand, internally generated cash flows
  and available credit will be sufficient to cover LVMHs
  anticipated cash flow requirements.

Consolidated Statements of Cash
  Flows  2001

The
  consolidated statement of cash flows, included in the consolidated
  financial statements, details the major financial flows of the
  year.

Financing
  requirements, as a result of operating and investing activities,
  and after payment of dividends during the period, amounted to
  EUR 809 million. These needs, as well as those relating to the
  amortization of financial loans and debts, were met through
  new loans and financial debts, a large proportion of which were
  long-term.

Net
  cash provided in 2001 by operating activities before changes
  in current assets and liabilities amounted to EUR 919 million.
  Changes with respect to 2000 resulted primarily from the decline
  in net income, which was partially offset by the increase in
  depreciation and amortization.

Working
  capital requirements increased by EUR 345 million. Specifically,
  the changes in inventory and accounts payable led to the need
  for EUR 383 million in cash. This change specifically reflects
  the partial restoration ofLouis
  Vuittoninventory, which
  was reduced in 2000 to an insufficient level, and a gradual
  increase in the direct distribution of certain brands in the
  Fashion and Leather Goods or Watches and Jewelry business groups.
  It is also the result of the economic slowdown at year-end in
  certain activities.

In
  all, operating activities gave rise to a net cash inflow of
  EUR 574 million, compared with EUR 859 million in 2000.

Net
  cash used in investing activities amounted to EUR 894 million,
  or EUR 217 million if the effects of the reclassification of
  securities are excluded. Indeed LVMHs stake in Bouygues
  was reclassified from short-term investments in 2000 to long
  term investments in 2001.

57



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LVMH
  operating investments constituted a cash disbursement of EUR
  984 million (including acquisitions of intangible assets of
  EUR 80 million and of tangible assets of EUR 904 million). They
  primarily included the increase inLouis
  Vuittons production
  capacity, the development ofDFSandLouis Vuittondistribution networks, and real estate investments. Investments
  in the Fashion and Leather Goods and the Selective Retailing
  business groups accounted for roughly 60% of total LVMH investments
  in 2001.

Acquisitions
  of consolidated companies and other investments totaled EUR
  1,073 million in 2001. Specifically, the cash impact of the
  acquisitions of Gabrielle Studio andDonna Karan Internationalrepresented EUR 436 and EUR 206 million. The effect of purchasingPradas
  interest inFendiwas EUR 40 million, with the balance being subject to deferred
  payment. The effect of theLa
  Samaritaineacquisition was EUR 112 million.

Sales
  of fixed assets generated proceeds of EUR 2,271 million. This
  amount mainly resulted from the sale of LVMHs interest
  in Gucci, which contributed some EUR 2,122 million to this positive
  effect.

LVMHs
  purchases of treasury Shares, net of disposals, represented
  EUR 13 million in 2001, compared with EUR 339 million in 2000.

During
  the same period, capital increases subscribed by minority shareholders
  generated inflows of EUR 38 million.

In
  2001, dividends paid by LVMH, not including Shares held in treasury,
  totaled EUR 343 million, EUR 243 million of which was distributed
  in June 2001 as the balance for fiscal year 2000, and EUR 100
  million of which was distributed in December 2001 as an interim
  dividend for fiscal year 2000. In addition, dividends paid to
  minority shareholders of the consolidated subsidiaries, primarily
  Diageo with respect to its holding inMoët
  Hennessy, totaled EUR 171
  million.

Repayments
  on short-term borrowings and long-term debt amounted to EUR
  2,294 million.

Issuances
  of borrowings and financial debt generated proceeds of EUR 2,469
  million. LVMH pursued its policy of lengthening its debt maturity,
  primarily by issuing bonds, the volume of which totaled EUR
  1,950 million in 2001. In particular, in February 2001 three-year
  bonds with a par value of EUR 800 million, and in June 2001
  seven-year bonds with a par value of EUR 500 million were issued.
  In addition, LVMHs Euro Medium-Term Notes program set
  up under French law in 2000 allowed LVMH to issue numerous bonds
  totaling EUR 650 million. LVMHs recourse to short-term
  financial debt was lower in 2001, with the issuance of commercial
  paper declining by EUR 833 million during the financial year.

Following
  these operations, change in cash flow is thus a positive EUR
  248 million, and cash, cash equivalent and short-term investments
  remain at a high level. As of December 31, 2001, taking into
  account LVMH Shares held outside option plans, LVMHs available
  cash and liquid investments had a book value exceeding EUR 2.2
  billion.

LVMH
  believes that working capital is sufficient for its present
  requirements: cash on hand, internally generated cash flows
  and available credit will be sufficient to cover LVMHs
  anticipated cash flow requirements.

Financial Structure  2002
  as compared to 2001

In
  2002, liabilities were reduced and LVMHs financial structure
  was improved. As a result of significant funds provided by operating
  activities, asset disposals, and the decline in the U.S. dollar
  against the euro, LVMH reduced its net long-term debt significantly.

As
  of December 31, 2002, LVMHs total consolidated assets
  totaled EUR 21,417 million, a 10% reduction from the EUR 23,832
  million as of December 31, 2001.

Total
  fixed assets totaled EUR 13,490 million, compared with EUR 14,280
  million at year-end 2001, representing 63% of the total balance
  sheet compared to 60% the previous year.

Intangible
  fixed assets held steady at EUR 7,830 million, compared with
  EUR 7,824 million at year-end 2001. Brands and other fixed assets
  decreased slightly, accounting for EUR 4,199 million compared
  with EUR 4,308 million the previous year. Goodwill after amortization
  rose slightly to EUR 3,631 million, compared with EUR

58



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3,516 million at year-end 2001,
  as a result of the first consolidation ofDonna
  Karanand the purchase
  of certain minority interests ofFendi,
  despite the regular amortization of goodwill and the effects
  of the fall of the U.S. dollar exchange rate against the euro
  in 2002.

Tangible
  fixed assets net of depreciation, decreased to EUR 3,850 million,
  compared with EUR 4,208 million at year-end 2001. This decline
  is due to disposals, includingPommeryand
  several real estate assets, as well as the effects of currency
  exchange variations. Operating investments for the year were
  substantially reduced and were focused on the store network.

Long-term
  investments fell to EUR 1,810 million, compared with EUR 2,248
  million a year earlier. This decrease reflects mainly the consolidation
  ofDonna Karanand changes in the value of the stake owned in Bouygues, as
  well as, conversely, the increase in LVMH shares held for more
  than one year.

Inventories
  totaled EUR 3,427 million, compared with EUR 3,655 million at
  yearend 2001. This change reflects robust year-end sales,
  the favorable effect of exchange rate variations and sound inventory
  control in most of LVMHs business groups, despite continued
  efforts to rebuildLouis
  Vuittoninventories.

Cash,
  cash equivalents and short-term investments decreased to EUR
  872 million from EUR 1,417 million at December 31, 2001. The
  book value of this item was EUR 1,166 million including LVMH
  short-term shares held by it outside option plans.

In
  2002, stockholders equity, before allocation of earnings,
  rose to EUR 7,070 million, compared with EUR 6,901 million a
  year earlier.

Minority
  interests, consisting primarily of Diageos 34% interest
  inMoët HennessyandFendifamily
  interests inFendi,
  held steady at EUR 1,772 million. Acquiring a portion of the
  minority interests inFendiwas offset by the minority share in the profit for the year.

Total
  stockholders equity and minority interests before allocation
  of earnings therefore amounted to EUR 8,842 million, or 41%
  of the total consolidated balance sheet.

Long-term
  liabilities at year-end amounted to EUR 5,974 million, including
  EUR 4,776 million in long-term financial debt. In relation to
  the total balance sheet, this item fell slightly to 28% down
  from 30% at year end 2001.

Permanent capital totaled EUR 14,816
  million and exceeded the amount of fixed assets.

Short-term
  liabilities totaled EUR 6,601 million at December 31, 2002,
  compared with EUR 8,026 million at year-end 2001, essentially
  due to the reduction in short-term borrowings, which were EUR
  2,578 million at year end 2002 compared with EUR 4,003 million
  at year-end 2001. This item represented 31% of the total balance
  sheet, down from 34% at year-end 2001.

Total
  short and long-term debt, net of cash, cash equivalent and short-term
  investments, as of December 31, 2002, amounted to EUR 6,483
  million. It accounted for 73% of stockholders equity and
  minority interests compared with 95% at December 31, 2001.

The
  debt reduction policy instituted at year-end 2001 with the sale
  of the interest in Gucci, was substantially continued, with
  net financial debt falling by EUR 1,789 million.

After
  deducting the market value of the Bouygues stake and the treasury
  shares not allocated to stock option plans, net financial debt
  was EUR 5,786 million or 66% of shareholders equity.

Borrowings
  maturing in more than one year as a proportion of total net
  debt increased and now represent 74% of total net debt.

Confirmed
  credit lines totaled approximately EUR 4.6 billion. Only EUR
  0.9 billion was drawn at year-end 2002. Thus, undrawn confirmed
  credit lines greatly exceed the cover of the commercial paper
  program, which outstanding had been reduced to EUR 1,447 million
  as of December 31, 2002 from EUR 2,837 million a year earlier.

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Financial Structure  2001
  as compared to 2000

LVMHs
  total consolidated assets as of December 31, 2001 was EUR 23,832
  million, a 3% increase on the 2000 level.

Total
  fixed assets amounted to EUR 14,280 million, compared to EUR
  13,000 million at year-end 2000. This represented 60% of the
  total balance sheet, compared with 56% in 2000.

Intangible
  fixed assets totaled EUR 7,824 million, compared with EUR 7,257
  million at year-end 2000. Brands and other intangible fixed
  assets totaled EUR 4,308 million, compared to EUR 3,415 million
  a year earlier; this increase resulted from the consolidation
  of the investments inGabrielle
  Studio (Donna Karan),La
  Samaritaine,Newton
  Vineyards,MountAdam,
  and the additional investment inFendi.
  Goodwill net of depreciation fell to EUR 3,516 million, compared
  to EUR 3,842 million at year-end 2000, primarily because of
  the extraordinary depreciation in 2001 of theDFSgoodwill.

Tangible
  fixed assets net of depreciation, however, represented EUR 4,208
  million, compared to EUR 3,367 million, because of the acquisitions
  that took place in 2001, particularly that ofLa
  Samaritaine, as well as
  operating investments, specifically in theLouis
  Vuitton,DFSandSephoradistribution
  networks.

The
  stability of long term investments at EUR 2,248 million, versus
  EUR 2,376 million last year, results from the decrease of unconsolidated
  investments and other investments due to the sale of LVMHs
  interest in Gucci, offset by the reclassification under long-term
  investment of the investment in Bouygues, as well as the increase
  in LVMH treasury Shares held for more than one year allocated
  to stock option plans.

Inventories
  amounted to EUR 3,655 million, as compared to EUR 3,382 million
  at 2000 year-end, due to the gradual recreation ofLouis
  Vuittoninventories, the take-over of direct distribution
  of certain brands and the slowdown of certain activities at
  the end of the financial year.

Cash,
  cash equivalents and short-term investments remained high, at
  EUR 1,417 million as of December 31, 2001. Including LVMH treasury
  Shares not allocated to stock option plans, this amount would
  be EUR 2,270 million.

In
  2001, stockholders equity remained stable, totaling EUR
  6,901 million at year-end 2001 before allocation of earnings,
  compared to EUR 7,031 million at year-end 2000.

Minority
  interests, primarily consisting of Diageos 34% interest
  inMoët HennessyandFendifamily
  interests inFendi,
  increased to EUR 1,800 million at year-end 2001, compared to
  EUR 1,481 million one year earlier. This change resulted primarily
  fromFendis
  full consolidation as of December 31, 2001.

Total
  stockholders equity and minority interests therefore totaled
  EUR 8,701 million, representing 36% of the total balance sheet.

Long-term
  financial debt, including repackaged notes, increased to EUR
  5,686 million, compared with EUR 3,844 million at year-end 2000.
  The portion of long-term financial debt within net financial
  debt totaled 69%, thereby continuing the medium-term consolidation
  of LVMH debt.

Short-term
  financial debt fell to EUR 4,003 million, compared with EUR
  5,568 million, reflecting a decline in the issuance of commercial
  paper.

Total
  short and long-term financial debt, net of cash, cash equivalents
  and short-term investments (stricto sensu), totaled EUR 8,272
  million at year-end 2001. It represented 95% of stockholders
  equity and minority interests, compared with 87% at year-end
  2000. When including the market value of LVMHs stake in
  Bouygues and of LVMHs treasury Shares not allocated to
  stock option plans, this ratio was 79%.

In
  2001, LVMH will continue its policy begun in 2001 with the sale
  of Guccis shares of reducing financial debt.

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Confirmed
  lines of credit totaled approximately EUR 5.3 billion. They
  were mostly undrawn, and constitute both a reserve of available
  cash and the back-up of the commercial paper program, which
  totaled EUR 2,837 million outstanding as of December 31, 2001,
  compared with EUR 3,670 million one year earlier.

Contractual Obligations Table

The
  following represent the contractual obligations and commercial
  commitments of LVMH as of December 31, 2002:

|                                    | Payments
      and Commitments Due or Expiring per Period | 
|----------------------------------- | --------------------------------------------------------- | 
|                                    |                                                           | 
|                                    |                                                           | 
|                                    |                                                           | 
|Contractual
      Obligations       | Total                                                     | 
|                                    |                                                           | 
|Long Term Debt                      | 4,828                                                     | 
|Capital Lease Obligations(1)        | 531                                                       | 
|Operating Leases                    | 2,251                                                     | 
|Concession Fees                     | 916                                                       | 
|Commercial Purchase Obligations     | 429                                                       | 
|Share Purchase Commitments(2)       | 756                                                       | 
|Tangible Asset Purchase Obligations | 104                                                       | 
|Securitization                      | 260                                                       | 
|Guarantees(2)                       | 195                                                       | 
|Undrawn Confirmed Lines of Credit   | 3,709                                                     | 
|                                    |                                                           | 

|(1) | These amounts include
      interest payments of EUR 387 million.   
|--- | --------------------------------------------------------------------
|(2) | Where the term
      is conditional, the maximum date has been used.

Events Subsequent to Year End
  2002

In
  the first quarter of 2003, LVMH increased its investment inFendito 84% by acquiring shares representing 17.2% of that companys
  capital for the amount of EUR 190 million.

As
  of the end of February 2003, LVMH:

- had sold its 36% stake inMichael
      Kors fashion
      and leather goods business for 13.9 million U.S. dollars;
- had sold its remaining 27.5%
      investment inPhillipsfor a symbolic one
      U.S. dollar. This operation had no additional impact other
      than the ones already recorded for 2002 as discussed above
      in Item 5  Consolidated
      Data Discussed by Business Group for 2000, 2001 and 2002
       Geographic Information and Investments  Other
      Activities;
- had increased its equity investment
      in Rossimoda from 45% to 97% for the amount of EUR 32.5
      million.

In
  May 2003, LVMH sold itsMichael
  Korsfragrance and beauty
  products business and related license agreement to Aramis Inc.,
  a subsidiary of Estee Lauder for US $22 million, and signed
  a contract to sell itsMarc
  JacobsandKenneth
  Colefragrance and beauty products businesses and related
  license agreements to Coty Inc.

In
  June 2003, LVMH sold its entire interest in Thomas Hine &
  Co. for EUR 15 million.

Outlook for 2003

In
  an unstable geopolitical context, LVMH continues to focus its
  efforts on the development of its leading brands. While it continues
  to watch international economic trends, LVMH is accelerating
  measures designed to improve profitability and gain market shares.

The
  geographic distribution of its businesses, the power of LVMHs
  brands, the motivation of its teams, its policy of innovation,
  and the quality of its products should strengthen the leadership
  of LVMH in the global luxury

61



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market in 2003. At the annual shareholders
  meeting in May 2003, LVMH confirmed its objective for 2003 to
  achieve tangible growth of operating income in 2003 and give
  priority to cash generation.

SARS
  struck the East Asian and South East Asian regions beginning
  in early 2003. As a result, tourism was severely lower in these
  regions and somewhat lower in other parts of the world. LVMHs
  management expects this decrease in tourism to have an impact
  primarily on DFS operations. LVMH is taking vigorous
  cost cutting measures and expects that tourism may improve significantly
  before the important September-to-December period. For a further
  discussion of the effects of SARS please see Item 3  Key
  Information  Risk Factors.

Auditors Fees

LVMHs
  statutory auditors are Ernst & Young Audit (Ernst
  & Young) and COGERCO-FLIPO, member of the Deloitte
  Touche Tohmatsu network (COGERCO-FLIPO). Ernst and
  Young were first appointed as auditors in June 1986; their current
  term began in June 1998 and will expire on the day of the LVMH
  annual general shareholders meeting for 2003. COGERCO-FLIPO
  were first appointed as auditors in June 1996; their current
  term began in June 1998 and will expire on the day of the LVMH
  annual general shareholders meeting for 2003.

Under
  French law, LVMH is required to disclose the fees it paid in
  2002 to its statutory auditors responsible for signing the companys
  financial statements. The table below shows such fees but does
  not include amounts paid by LVMH to its other auditors or accounting
  firms for services performed by such entities in 2002.

|                    | Ernst
      & Young |  | Deloitte
      Touche Tohmatsu               | 
|------------------- | ------------------- |  | -------------------------------------------- | 
|                    |                     |  |                                              | 
|                    | Amount              |  | %                                            | 
|                    |                     |  |                                              | 
|                    |                     |  | (in
      EUR thousands, except percentages) | 
|Audit               |                     |  |                                              | 
|Statutory           | 11,415              |  | 87                                           | 
|Related assignments | 852                 |  | 7                                            | 
|                    |                     |  |                                              | 
|                    | 12,267              |  | 94                                           | 
|Other services      |                     |  |                                              | 
|Legal, tax, social  | 622                 |  | 5                                            | 
|Other               | 142                 |  | 1                                            | 
|                    |                     |  |                                              | 
|                    | 764                 |  | 6                                            | 
|                    |                     |  |                                              | 
|Total               | 13,031              |  | 100                                          | 
|                    |                     |  |                                              | 

RESEARCH AND DEVELOPMENT

LVMH
  actively engages in research and development activities relating
  both to its introduction of new products and production processes
  and to the improvement of its existing products and processes.
  In 2002, the most significant research efforts were conducted
  in the areas perfumes and cosmetics. For a further discussion
  of LVMHs research and development activities in the Perfumes
  and Cosmetics business group see Item 4  Information
  on the CompanyBusiness Overview  (3) Perfumes and
  Cosmetics  (b) Research in perfumes and cosmetics.
  Research and development costs relating to scientific research
  expenses and development of new products amounted to EUR 36
  million in 2002, EUR 27 million in 2001 and EUR 21 million in
  2000. Research and development costs relating to packaging and
  design amounted to EUR 47 million in 2002, EUR 37 million in
  2001 and EUR 40 million in 2000.

TREND INFORMATION

Most Significant Trends Since
  the Latest Financial Year

At
  the end of March 2003, net sales totaled EUR 2,803 million,
  up 6% on a comparable structural and exchange rate basis from
  the end of March 2002.

This
  organic growth occurred at the level of income from operations
  with higher than budgeted growth due in particular to the exceptional
  success ofLouis Vuitton,
  which posted a double-digit increase in volume during the first
  quarter of 2003. In addition, the negative foreign exchange
  impact on income from operations was offset by the effects of
  currency hedges entered into by LVMH.

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The
  Champagne and Wines business group, after growth of more than
  30% over the same period in 2001, is once again posting organic
  growth in 2003. Cognac volumes, in particular, are recording
  significant growth in the United States.

In
  the Fashion and Leather Goods business group,Louis
  Vuittoncontinues to gain
  market shares and opened its first store in New Delhi, India
  in March 2003.

Within
  the Perfumes and Cosmetics business group,Christian
  Dioris showing significant
  growth, driven primarily by the success of the latest line of
  skincare products. Net sales for the business group were up
  6% in the first quarter of 2003.

In
  Selective Retailing,DFShas implemented a set of measures intended to adjust its cost
  structure to the weakness of international tourism.Sephorais recording the same positive
  trends as last year, with double-digit growth in net sales in
  the United States on a same-store basis.

Net sales by business group at the
  end of March 2003 were as follows:.

|                                  |              |  |              |  | Change
      in currencies (as %): |  
|--------------------------------- | ------------ |  | ------------ |  | ---------------------------------- | -
|                                  | At March 31, |  | At March 31, |  |                                    |  
|(in EUR millions)                 | 2003         |  | 2002         |  | current(2)                         |  
|                                  |              |  |              |  |                                    |  
|Wines and Spirits                 | 407          |  | 457          |  | (11                                | )
|Fashion and Leather Goods         | 1,068        |  | 1,081        |  | (1                                 | )
|Perfumes and Cosmetics            | 486          |  | 499          |  | (3                                 | )
|Watches and Jewelry               | 97           |  | 122          |  | (20                                | )
|Selective Retailing               | 745          |  | 780          |  | (5                                 | )
|Other Activities and eliminations |             |  | 17           |  | na                                 |  
|                                  |              |  |              |  |                                    |  
|Total                             | 2,803        |  | 2,956        |  | (5                                 | )
|                                  |              |  |              |  |                                    |  

Trends and Uncertainties of the
  Current Financial Year

For
  a discussion of the trends and uncertainties of the current
  financial year, see Operating Results  Outlook for
  2003 above.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT
  AND EMPLOYEES

DIRECTORS AND
  SENIOR MANAGEMENT

Board of Directors

The
  orientation of LVMHs business is currently determined
  by a Board of Directors consisting of 16 members. The members
  of the Board of Directors are elected by LVMHs shareholders.

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The members of LVMHs Board
  of Directors are as follows:

|                                    |                                            |     |  | Year
      of Initial |  | Expiration    | 
|----------------------------------- | ------------------------------------------ | --- |  | --------------------- |  | ------------- | 
|Name                                | Position                                   | Age |  | Appointment(1)        |  | of
      Term | 
|                                    |                                            |     |  |                       |  |               | 
|Mr. Bernard
      Arnault           | Chairman and Chief
      Executive Officer | 54  |  | 1988                  |  | 2004          | 
|Mr. Antonio
      Belloni           | Member and Group
      Managing Director   | 49  |  | 2002                  |  | 2005          | 
|Mr. Antoine
      Bernheim(2)       | Vice Chairman                              | 78  |  | 1988                  |  | 2006          | 
|Mr. Jean Arnault                    | Member                                     | 83  |  | 1988                  |  | 2004          | 
|Mr. Nicolas
      Bazire            | Member                                     | 45  |  | 1999                  |  | 2005          | 
|Mr. Nicholas
      Clive Worms(2)   | Member                                     | 60  |  | 1988                  |  | 2004          | 
|Mr. Diego
      Della Valle(2)      | Member                                     | 49  |  | 2002                  |  | 2005          | 
|Mr. Michel
      François-Poncet(2) | Member                                     | 68  |  | 1987                  |  | 2005          | 
|Mr. Albert
      Frère              | Member                                     | 77  |  | 1997                  |  | 2006          | 
|Mr. Jacques
      Friedmann(2)(3)   | Member                                     | 70  |  | 2003                  |  | 2005          | 
|Mr. Pierre
      Godé               | Member                                     | 58  |  | 1989                  |  | 2006          | 
|Mr. Gilles
      Hennessy           | Member                                     | 54  |  | 1990                  |  | 2005          | 
|Mr. Arnaud
      Lagardère(4)       | Member                                     | 42  |  | 2003                  |  | 2006          | 
|Mr. Jean Peyrelevade(2)             | Member                                     | 63  |  | 1995                  |  | 2004          | 
|Lord Powell
      of Bayswater      | Member                                     | 61  |  | 1997                  |  | 2006          | 
|Mr. Felix
      G. Rohatyn          | Member                                     | 75  |  | 2001                  |  | 2004          | 
|                                    |                                            |     |  |                       |  |               | 

---

|(1) | Dates indicate
      the year of appointment to the Board of Directors created
      on May 25, 1992 or, if prior to May 25, 1992, to the then
      existing Organes de Direction,
      as the case may be.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Independent Director.                                                                                                                                                                                          
|(3) | Replaces Mr. Cornelis
      H. van der Hoeven who resigned from the Board of Directors
      as of March 5, 2003.                                                                                              
|(4) | Mr. Arnaud Lagardère
      was appointed on May 15, 2003.                                                                                                                                                      

Under
  French law governing asociété
  anonyme, the Board of Directors
  sets guidelines for LVMHs business and ensures the implementation
  of such guidelines. Pursuant to LVMHsstatuts,
  members of the Board of Directors are elected for a term of
  three years and may be reelected indefinitely.

The
  charter for the Board of Directors specifies that at least four
  of its members must be outside Directors with no business ties
  to LVMH, and that no more than four Directors or permanent representatives
  of legal entities may be drawn from non-LVMH companies in which
  the Chairman or a Director acting as a Managing Director or
  as a Deputy Managing Director of LVMH holds a corporate office.
  Each Director must hold at least 500 Shares in registered form
  for his entire term of office. Each Director is committed to
  attending Board meetings and shareholders meetings on
  a regular basis. Repeated absenteeism without cause may, upon
  proposal by theNominating
  and Compensation Committee, lead to the early termination of
  a Directors term. All Directors must inform the Chairman
  of any potential or existing conflict of interest and any transactions
  entered into with an LVMH company in which they have a stake,
  and must abstain from voting on any matter in which they directly
  or indirectly have a personal interest.

Upon
  the recommendation of the Board of Directors, a maximum of nine
  Advisors may be elected by LVMHs shareholders from among
  the shareholders for a term of three years to consider and advise
  the Board of Directors or its Chairman on questions submitted
  to them. Mr. Kilian Hennessy is the current Advisor to the Board.
  He was initially appointed in 1988 as an Advisor and his appointment
  expires in 2004. Mrs. Brigitte Chandon-Moët and Mr. Ghislain
  de Vogüé served as Advisors to the Board from 1990
  until May 2001.

The
  Board of Directors met four times in 2002.

The
  following is a summary of the business experience and certain
  other positions held by members of the Board of Directors of
  LVMH during 2002:

Mr.
  Bernard Arnaulthas been
  chairman and chief executive officer of LVMH since January 1989
  and a member of the Board since September 1988. He is also chairman
  and chief executive officer of Montaigne Participations et Gestion,
  France and chairman of the board of directors of Christian Dior,
  France. Mr. Arnault is chairman of the board of directors of
  Société Civile du Cheval Blanc, France and a member
  of the board of directors of Christian Dior Couture,
  France, Moët Hennessy Inc., USA and LVMH Moët Hennessy
  Louis Vuitton (Japan) KK, Japan. He is the permanent representative
  of the company Montaigne Participations et Gestion, as director
  of Financière Agache, France. Mr. Arnault is also the
  legal representative of Montaigne Participations et Gestion,
  as

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president of Gasa Développement,
  France, and Financière Saint Nivard, France. Mr. Arnault
  is also president of Group Arnault SAS, France and a member
  of the supervisory committee of Financière Jean Goujon,
  France. Mr. Arnault is the son of Mr. Jean Arnault, another
  LVMH Director.

Mr.
  Antonio Bellonihas been
  group managing director since September 2001 and a member of
  LVMHs Board of Directors since May 2002. He is also managing
  director of LVMH Inc., USA and is a member of the board of directors
  of Acqua di Parma, Italy; De Beers LV Limited, Great Britain;
  DFS Group Limited, Bermuda; DFS Holdings Limited, Bermuda;DFSGroup LP,
  USA;DFSGuam LP, Guam; and Fendi, Luxembourg.

Mr.
  Antoine Bernheimis vice
  chairman of LVMH and has been a member of LVMHs Board
  of Directors since September 1988. Mr. Bernheim is also a partner
  with Lazard LLC, USA and chairman of the board of Generali,
  Italy. Mr. Bernheim is also a member of the board of directors
  of the following companies: Bolloré Investissement, France;
  Christian Dior, France; Christian Dior Couture,
  France; Ciments Français, France; Eurazeo, France; Generali
  France Holding, France; Rue Impériale, France; AMB, Germany;
  BSI, Switzerland; EA-Generali, Austria; Intesa S.p.a, Italy;
  and Mediobanca, Italy.

Mr.
  Jean Arnaulthas been a
  member of LVMHs Board of Directors since September 1988.
  Mr. Arnault is also chairman and chief executive officer of
  Omnium Lyonnais dEtudes, France and a member of the management
  committee of Group Arnault SAS, France. He also serves as deputy
  managing director and is a member of the board of directors
  of Montaigne Participations et Gestion, France. Mr. Arnault
  is president of Heliantis, France and serves as a member of
  the board of directors of the following companies: Belle Jardinière,
  France; Christian Dior Couture, France; Financière Agache,
  France; Montaigne Finance, France; and Parfums Christian Dior,
  France. Mr. Arnault is also the legal representative of Montaigne
  Participations et Gestion, as president of Financière
  Saint Nivard, France and Gasa Développement, France.
  Mr. Arnault is the father of Mr. Bernard Arnault, Chairman and
  Chief Executive Officer of LVMH.

Mr.
  Nicolas Bazirehas been
  a member of LVMHs Board of Directors since May 1999 and
  has been a member of the Executive Committee, Development and
  Acquisitions, since 1999. Mr. Bazire is also chairman of the
  board of directors of Limited Partners, Rothschild et Cie Banque,
  France and chairman of the supervisory board of LVMH Fashion
  Group, France. He is executive director of Groupe Arnault SAS,
  France and a member of the board of directors and deputy managing
  director of Montaigne Participations et Gestion, France. Mr.
  Bazire is a member of the board of directors of the following
  companies: DI Group, France; Europatweb, France; and Ipsos,
  France. Mr. Bazire is vice-chairman and a member of the supervisory
  board of Tajan, France. He is also president of GAInvestissements,
  France and MPG Investissements, France. He is also legal representative
  of Montaigne Participations
  et Gestion, as president of Gasa Développement, France
  and Financière Saint Nivard, France. Mr. Bazire is manager
  of Bourville, France and a member of the management committee
  of Paul Doumer Automobiles, France.

Mr.
  Nicholas Clive Wormshas
  been a member of LVMHs Board of Directors since September
  1988. He is also chairman of the supervisory board of Worms
  & Cie, France; president of Worms 1848, France; and chairman
  of the board of directors of Worms & Co. Ltd., Great Britain,
  and Worms & Co. Inc., USA. Mr. Clive Worms is a member of
  the board of directors of Financière des Services Maritimes,
  France; Infabanque, France; Unibail, France; and Haussman Holdings,
  NV, Curaçao.

Mr.
  Diego Della Vallehas been
  a member of LVMHs Board of Directors since May 2002. He
  is also chairman and chief executive officer of Tods SpA,
  Italy. Mr. Della Valle is a member of the board of directors
  of Acqua di Parma, Italy and Le Monde Europe, France.

Mr.
  Michel François-Poncethas
  been a member of LVMHs Board of Directors since September
  1987. He is also president of BNP Paribas, Switzerland, vice
  chairman of the board of directors of BNP Paribas, France and
  vice president of Pargesa Holding SA, Switzerland. Mr. François-Poncet
  is a member of the supervisory board of Axa, France and a member
  of the board of directors of the following companies: Finaxa,
  France; Schneider Electric SA, France; BNP Paribas U.K. Holdings
  Ltd., Great Britain; Erbé, Belgium; Power Corporation
  of Canada, Canada; and Vittoria Assicurazioni, Italy.

Mr.
  Albert Frèrehas
  been a member of LVMHs Board of Directors since May 1997.
  He is also chairman of the board of directors of Erbé
  S.A., Belgium; Frère-Bourgeois S.A., Belgium and Petrofina
  S.A., Belgium. Mr. Frère is also chairman of the board
  of directors and deputy director of Groupe Bruxelles Lambert
  S.A., Belgium. He

65



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is honorary manager of the National
  Bank of Belgium and vice chairman, deputy director and member
  of the management committee of Pargesa Holding S.A., Switzerland.
  He serves as vice chairman of the board of directors of Suez,
  France and is a member of the board of directors of Société
  Civile du Cheval Blanc, France. He also serves as vice president
  of the supervisory board of Métropole Télévision
  M6, France. Mr. Frère is a permanent representative
  of the company Belholding Belgium SA, as a member of the management
  committee of Groupe Arnault SAS, France. He is also a member
  of the international committee of Assicurazioni Generali S.p.A.,
  Italy and of the international advisory board of Power Corporation
  of Canada, Canada.

Mr.
  Jacques Friedmannhas been
  a member of LVMHs Board of Directors since March 2003.
  He is also chairman of the guidance council of Quai Branly Museum,
  France and chairman of the board of directors of Association
  de la Galerie du Jeu de Paume, France. Mr. Friedmann is also
  a member of the supervisory board of LVMH Fashion Group, France
  and a member of the board of directors of BNP Paribas, France
  and TotalFinaElf France.

Mr.
  Pierre Godéhas
  been a member of LVMHs Board of Directors since January
  1989 and has been an Advisor to the Chairman and Chief Executive
  Officer since 1989. He is chairman and chief executive officer
  of Financière Agache, France; and Raspail Investissements,
  France. Mr. Godé is also a member of the executive board
  and managing director of LVMH Fashion Group, France and a member
  of the management committee of Montaigne Finance, France. He
  is also executive director of Groupe Arnault SAS, France and
  a member of the board of directors and deputy managing director
  of Le Bon Marché, France.
  He is a member of the board of directors of the following companies:
  Christian Dior Couture,
  France; Christian Dior, France; Montaigne Participations et
  Gestion, France; SA du Château dYquem, France; Société
  Civile du Cheval Blanc, France; Christian DiorInc., USA; LVMH Moët Hennessy Louis Vuitton
  Inc., USA; LVMH Moët Hennessy Louis Vuitton (Japan) KK,
  Japan; and LVMH Services Limited, Great Britain. He is permanent
  representative of the following companies: Financière
  Agache as a director of Parfums Christian Dior,
  France; Le Bon Marché, Maison Aristide Boucicaut, as
  a director of Franck & Fils, France; Louis Vuitton Malletier,
  as a director of Belle Jardinière, France; and LVMH as
  a director of DI Group, France. Mr. Godé is president
  of Sèvres Investissements, France, and Financière
  Jean Goujon, France. Mr. Godé is the legal representative
  of Financière Agache, as president of Aristide Boucicaut,
  France; and as manager of Lamourelle Paris, France and of Sevrilux,
  France; and LVMH as a member of the management committee of
  Sofidiv, France.

Mr.
  Gilles Hennessyhas been
  a member of LVMHs Board of Directors since June 1990.
  He is chairman of the board of directors of Jas Hennessy &
  Co. Ltd., Ireland; and a member of the board of limited partners
  of Jas Hennessy & Co., France and Veuve Clicquot Ponsardin,
  France. Mr. Hennessy is a member of the board of directors of
  France Champagne, France; Moët Hennessy UK Ltd., Great
  Britain; and Moët Hennessy, Shanghai, China. He is also
  the permanent representative of Jas Hennessy & Co., as a
  member of the board of limited partners of Champagne Moët
  & Chandon, France. He is also manager of LVMH Wine and Spirit
  Deutschland GmbH, Germany. Mr. Hennessy is the son of Mr. Kilian
  Hennessy, Advisor to LVMHs Board of Directors.

Mr.
  Arnaud Lagardèrehas
  been a member of LVMHs Board of Directors since May 2003.
  He is manager of Lagardère SCA, France and chairman and
  chief executive officer of Hachette SA, France and Lagardère
  Thématiques, France. Mr. Lagardère is also vice
  chairman and deputy managing director of Arjil Commanditée
   ARCO, France; a member of the board of directors and
  deputy managing director of Lagardère Capital & Management,
  France; vice chairman of the supervisory board of Banque Arjil
  & Compagnie, France; a member of the supervisory board of
  Virgin Stores SA, France. He also serves as a member of the
  board of directors of the following companies: Canalsatellite,
  France; Fondation Hachette, France; France Télécom,
  France; Hachette Livre, France; Hachette Distribution Services,
  France; Hachette Filipacchi Médias, France; Société
  dAgences et de Diffusion, France; Matra Hachette Général
  (SAS), France; and Lagardère Sociétés (SAS),
  France. Mr. Lagardère is president of the following companies:
  Lagardère, France; Lagardère Active, France; Lagardère
  Active Broadband, France; and Lagardère Images, France.
  He is also deputy managing director of Lagardère Active
  Broadcast, France; permanent representative of Lagardère
  Active Publicité as a member of the board of directors
  of Lagardère Active Radio International, France; and
  representative of Hachette SA as a member of the management
  committee of Sédi TV  Téva, France. He is
  also manager of Lagardère Active Publicité France;
  Lagardère Elevage, France; and Nouvelles Messageries
  de la Presse Parisienne, France; and co-manager of I.S.-9, France.

Mr.
  Jean Peyrelevadehas been
  a member of LVMHs Board of Directors since June 1995.
  He is chairman of the board of directors of Crédit Lyonnais,
  France and a member of the supervisory board of Lagardère
  SCA, France.

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Mr. Peyrelevade is also a member
  of the board of directors of Bouygues, France; Suez, France;
  and Power Corporation of Canada, Canada.

Lord
  Powell of Bayswaterhas
  been a member of LVMHs Board of Directors since May 1997.
  He is chairman of the board of directors of Sagitta Asset Management,
  Great Britain and LVMH Services Limited, Great Britain. He is
  a member of the board of directors of the following companies:
  Financière Agache, France; British Mediterranean Airways,
  Great Britain; Caterpillar Inc., USA; J. Rothschild Name Co.
  Ltd., Great Britain; Falgos Investments Ltd., Great Britain;
  Mandarin Oriental International Ltd., Bermuda; Matheson &
  Co. Ltd., Great Britain; Schindler Holding, Switzerland; Textron
  Corporation, USA; Singapore Millennium Foundation Limited, Singapore;
  and Yell Group Ltd, Great Britain.

Mr.
  Felix G. Rohatynhas been
  a member of LVMHs Board of Directors since May 2001. He
  is chairman of LVMH Inc., USA and vice chairman of Carnegie
  Hall, USA. He is also a member of the board of directors of
  Fiat S.p.A., Italy; and Suez, France. Mr. Rohatyn is also a
  member of the supervisory board of Lagardère SCA, France
  and of Publicis, France.

The
  following is a summary of the business experience and certain
  other positions held by the Advisor of LVMHs Board of
  Directors:

Mr.
  Kilian Hennessyhas been
  an Advisor to LVMHs Board of Directors since September
  1988. Mr. Hennessy was previously a member of the Board from
  1971 to 1988. He is honorary chairman of Jas Hennessy &
  Co., France and a member of the board of directors of Parfums
  Christian Dior, France.

Executive Officers

The
  table below sets forth the names of the members of the Executive
  Committee, which was created in 1998 and which is now LVMHs
  principal management body, their current responsibilities and
  the dates they were first appointed to an executive position
  with LVMH.

|                       |                                                   | Year
      of Initial | 
|---------------------- | ------------------------------------------------- | --------------------- | 
|Name                   | Responsibility                                    | Appointment           | 
|                       |                                                   |                       | 
|Mr. Bernard Arnault    | Chairman and Chief
      Executive Officer        | 1989                  | 
|Mr. Antonio Belloni    | Group Managing Director                           | 2001                  | 
|Mr. Nicolas Bazire     | Development and
      Acquisitions                | 1999                  | 
|Mr. Edward Brennan     | Travel Retail                                     | 2000                  | 
|Mr. Yves Carcelle      | Fashion and Leather
      Goods                   | 1989                  | 
|Mr. Patrick Choël      | Perfumes and Cosmetics                            | 1996                  | 
|Mr. Pierre Godé        | Advisor to the Chairman
      and CEO             | 1989                  | 
|Mr. Patrick Houël      | Finance                                           | 1987                  | 
|Mrs. Concetta Lanciaux | Advisor to the Chairman
      and CEO, Synergies, | 1990                  | 
|                       | Group Representative
      Italy                  |                       | 
|Mr. Pierre Letzelter   | Sephora                                           | 1994                  | 
|Mr. Christophe Navarre | Wines and Spirits                                 | 1997                  | 
|Mr. Philippe Pascal    | Watches and Jewelry                               | 1994                  | 
|Mr. Daniel Piette      | LV Capital                                        | 1990                  | 
|Mr. Bernard Rolley     | Operations                                        | 1998                  | 

Mr. Bernard Arnault. See
  Board of Directors above.

Mr. Antonio Belloni. See Board of Directors
  above.

Mr.
  Nicolas Bazire.See Board of Directors above.

Mr.
  Edward Brennan.Mr. Brennan
  has been a member of the Executive Committee, Travel Retail
  since 2000 and has served as Chief Executive Officer ofDFSsince 2000. Mr. Brennan previously served as president ofDFSUSA region and president and executive vice president ofDFSHawaii region. He has also worked as store manager at Macys
  Northeast.

Mr.
  Yves Carcelle.Mr. Carcelle
  has been a member of the Executive Committee, Fashion and Leather
  Goods, since 1998. From 1990 to 2000, he held the position of
  chairman and chief executive officer of Louis Vuitton

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Malletier. In addition, since 2001,
  Mr. Carcelle has been the chairman of the executive board of
  the LVMH Fashion Group. Mr. Carcelle previously served as chairman
  and chief executive officer of Descamps (DMC Group) .

Mr.
  Patrick Choël.Mr.
  Choël has been a member of the Executive Committee, Perfumes
  and Cosmetics, since 1998 and was Chairman and Chief Executive
  Officer of Parfums Christian Dior from 1996 to 1998. Since 1996,
  Mr. Choël has held the position of Senior Vice-President.
  Prior to joining LVMH Mr. Choël served as president and
  chief executive officer of Cheeseborough Ponds. Mr. Choël
  began his career at Unilever.

Mr.
  Pierre Godé. See
  Board of Directors above.

Mr.
  Patrick Houël.Mr.
  Houël has been a member of the Executive Committee, Finance,
  since 1998. He was appointed chief financial officer of LVMH
  in 1987. In addition, Mr. Houël has served as a director
  of LVMH Moët Hennessy Louis Vuitton Inc. since 1996 and
  has been a director, chairman and chief executive officer of
  Sofidiv S.A.S. since 1990. Previously, Mr. Houël served
  as financial director of Moët Hennessyand Jas Hennessy and worked
  for Crédit Lyonnais.

Mrs.
  Concetta Lanciaux.Mrs.
  Lanciaux has been a member of the Executive Committee, Synergies,
  Advisor to the Chairman, Group Representative Italy since 2001.
  She has been employed by LVMH since 1990 as Executive Vice-President,
  Human Resources. Previously, Mrs. Lanciaux has been appointed
  as Senior Vice-President Human Resources of LVMH. Prior to joining
  LVMH Mrs. Lanciaux who holds a PhD was a Professor at Carnegie
  Mellon University, Pittsburgh, Pennsylvania and worked for Intel
  Corp. Europe as Vice-President Human Resources and for Financière
  Agache.

Mr.
  Pierre Letzelter.Mr. Letzelter
  has been a member of the Executive Committee, Sephora, since
  2001. He has been employed by LVMH and has held the title of
  Senior Vice President since 1994. Mr. Letzelter served as president
  of Moët & Hennessy from 1996 to 1999 and as president
  of Moët & Chandon from 1994 to 1996. Previously,
  he also worked for Petit Bateau, Yves Rocher and LOréal.

Mr.
  Christophe Navarre.Mr.
  Navarre has been a member of the Executive Committee, Wine and
  Spirits, since April 2001. He joined LVMH as Chairman and Chief
  Executive Officer of Jas Hennessy & Co. in 1997 and previously
  held positions at Esso Group and served as managing director
  of Interbrew.

Mr.
  Philippe Pascal.Mr. Pascal
  has been a member of the Executive Committee, Watches and Jewelry,
  since 2001. Mr. Pascal held the position of Chairman and CEO
  of Moët Hennessy from 1999 to 2001. Previously he was Chairman
  and Chief Executive Officer of Veuve Clicquot, a position he
  held since joining LVMH in 1994. Prior to working with LVMH
  Mr. Pascal worked for Seagrams champagne business unit
  as managing director and for Sopexa.

Mr.
  Daniel Piette.Mr. Piette
  has been a member of the Executive Committee, LV Capital, since
  1998. He currently holds the title of Senior Vice-President
  and has been employed by LVMH in a variety of positions since
  1990. Since September 1996, Mr. Piette has been a director of
  Sofidiv S.A.S. Mr. Piette served as a director of LVMH Moët
  Hennessy Louis Vuitton Inc. from 1996 to 2000. Prior to working
  with LVMH, Mr. Piette worked for DMC group as branch managing
  director.

Mr.
  Bernard Rolley.Mr. Rolley
  has been a member of the Executive Committee, Operations, since
  1998 with the title of Senior Vice President. In addition, since
  2000, Mr. Rolley served as a director of LVMH Moët Hennessy
  Louis Vuitton Inc. Prior to working with LVMH, Mr. Rolley served
  as chief financial officer of Carnaud Metalbox and worked for
  Valeo.

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COMPENSATION

In 2002, LVMHs Board of Directors
  received compensation and fringe benefits as follows:

|                                     |  | Fixed
      Compensation | Variable
      Compensation |  | Directors
      Fees |                  
|------------------------------------ |  | ------------------------ | --------------------------- |  | --------------------- | -----------------
|Name                                 |  |                          | (in
      EUR)(2)           |  |                       | (in
      EUR)(2)
|                                     |  |                          |                             |  |                       |                  
|Mr. Bernard Arnault                  |  |                          | 705,852                     |  |                       | 631,291          
|Mr. Jean Arnault                     |  |                          | --                          |  |                       | --               
|Mr. Nicolas Bazire(1)                |  |                          | 460,893                     |  |                       | 505,202          
|Mr. Antonio Belloni(1)(4)            |  |                          | 1,009,303                   |  |                       | 398,733          
|Mr. Antoine Bernheim                 |  |                          | --                          |  |                       | --               
|Mr. Nicholas Clive-Worms             |  |                          | --                          |  |                       | --               
|Mr. Diego Della
      Valle          |  |                          | --                          |  |                       | --               
|Mr. Michel François-Poncet           |  |                          | --                          |  |                       | --               
|Mr. Albert Frère                     |  |                          | --                          |  |                       | --               
|Mr. Pierre Godé(1)                   |  |                          | 310,476                     |  |                       | 1,641,907        
|Mr. Gilles Hennessy(1)               |  |                          | 153,868                     |  |                       | --               
|Mr. Cornelis H.
      van der Hoeven |  |                          | --                          |  |                       | --               
|Mr. Jean-Marie Messier               |  |                          | --                          |  |                       | --               
|Mr. Jean Peyrelevade                 |  |                          | --                          |  |                       | --               
|Lord Powell of Bayswater             |  |                          | 131,711                     |  |                       | --               
|Mr. Felix G. Rohatyn                 |  |                          | 131,391                     |  |                       | --               
|Mr. Myron Ullman(3)                  |  |                          | --                          |  |                       | --               

---

|(1) | Has also received
      advantages in the form of a company car.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Amounts are those
      paid by LVMH and companies it controls within the meaning
      of article L. 233-16 of the French Code de Commerce, after
      deduction of French social charges (includingContribution Sociale GénéraliséeandContribution
      au Remboursement de la Dette Sociale)
      calculated at the fixed rate of 10%, and of French personal
      income tax at the marginal rate of 49.58%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(3) | Mr. Myron Ullman
      retired from the Board of Directors on March 6, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(4) | Mr.
      Antonio Belloni was appointed to the Board of Directors
      on May 15, 2002. Mr. Belloni's employment agreement with
      LVMH provides for a base salary of EUR 2,286,000 per year
      and benefits upon termination of his employment. Pursuant
      to the agreement, dated May 14, 2001, upon termination by
      LVMH without cause or upon resignation with good reason,
      Mr. Belloni is entitled to an indemnification equal to two
      years base salary and may keep all vested share options
      and up to two years unvested share options previously awarded
      to him. If Mr. Belloni leaves LVMH without good reason he
      will be eligible to keep his vested share options and a
      portion of special stock option grant shares granted to
      him. The agreement provides for an annual incentive bonus,
      yearly housing allowance, the grant of stock options pursuant
      to the LVMH stock option plans and other benefits including
      insurance, a car and driver, family travel allowance and
      relocation assistance.

In
  2002, LVMH paid a total amount of EUR 951,888 in directors
  fees to members of its Board of Directors and its Advisor. The
  total aggregate compensation paid by LVMH in 2002 to members
  of its Executive Committee (including those who are members
  of the Board of Directors) as a group was approximately EUR
  33.2 million. In addition, as discussed in Share Ownership
  below, in 2002, LVMH granted options to certain of its Directors
  and executive employees (including members of its Executive
  Committee).

LVMHs
  shareholders set the total amount of directors fees paid
  to the members of the Board of Directors. This amount is distributed
  to the directors and the advisers, if any, on recommendation
  of the Nominating and Compensation Committee upon consideration
  of various factors, including the members attendance rate.
  Exceptional fees can be granted among members of the Board of
  Directors in compensation for special assignments or specific
  tasks borne within the various committees. The amount of such
  exceptional fees is determined by the Board of Directors, and
  provided to the statutory auditors of LVMH.

A
  portion of the compensation paid to members of the Executive
  committee and key members of management is based on the operating
  income, cash flow and return on capital allocated to the business
  groups and companies managed by the relevant executives, as
  well as their individual performance. This variable portion
  generally represents between one-third and one-half of their
  total compensation.

69



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In
  general, LVMH incurs certain costs related to its employees
  and executive officers retirement programs, medical costs
  and similar obligations. A majority of these obligations are
  imposed by French law on employers, while LVMH also chooses
  to provide supplemental benefits to some of its employees and
  executive officers. In 2002, the total amount incurred by LVMH
  with respect to such supplemental benefits amounted to EUR 46
  million.

BOARD PRACTICES

The
  Board of Directors has appointed two committees: the Performance
  Audit Committee and the Nominating and Compensation Committee.
  Committee members are appointed for indefinite terms as long
  as they remain members of the Board.

Performance Audit Committee

The
  Performance Audit Committee is comprised of Messrs. Michel François-Poncet,
  Nicholas Clive Worms and Gilles Hennessy. Mr. François-Poncet
  is chairman of the Committee. He was appointed to the Committee
  on January 29, 1998 and has been chairman since January 20,
  1999. Mr. Clive Worms was appointed to the Committee on January
  20, 1999. Mr. Gilles Hennessy was appointed to the Committee
  on January 29, 1998.

The
  Performance Audit Committee held five meetings in 2002.

Internal Rules of the Performance
  Audit Committee

Structure
  of the Committee

| | (i) | The Performance
      Audit Committee shall be made up of three directors, at
      least two of whom shall be independent directors. Its members
      shall be appointed by the Board of Directors.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |       |                                                                                                                                                                                                                                                                                                                                                                     
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii)  | The
      Board of Directors shall appoint a Chairman of the Committee
      from among its members.                                                                                                                                                                                                                                                                
| |       |                                                                                                                                                                                                                                                                                                                                                                     
| | (iii) | Neither
      the Chairman of the Board of Directors nor any director
      performing the duties of Chief Executive Officer or Deputy
      Managing Director of LVMH may be a member of the committee.                                                                                                                                                            
| |       |                                                                                                                                                                                                                                                                                                                                                                     
| | (iv)  | A director
      may not be appointed as a member of the Committee if the
      Chairman of the Board of Directors or a director serving
      as Chief Executive Officer or Deputy Managing Director of
      LVMH is already a member of a corresponding Committee in
      the company in which the first director holds a position
      as a corporate officer.

Role
  of the Committee

| | (i) | The
      missions of the Committee are to:
| | --- | -------------------------------------------
| |     |                                            
| |     | –                                          
| |     |                                            
| |     | –                                          
| |     |                                            
| |     | –                                          
| |     |                                            
| |     | –                                          
| |     |                                            
| |     | –                                          
| |     |                                            
| |     | –                                          



70



---

| |       | –                                                                                                                                                                                                                                                                   | assess
      any instances of conflict of interest that may affect a
      director and recommend suitable measures to prevent or correct
      them,
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                     |                                                                                                                                                      
| |       | –                                                                                                                                                                                                                                                                   | verify the quality
      of the information provided to shareholders.                                                                                
| |       |                                                                                                                                                                                                                                                                     |                                                                                                                                                      
| | (ii)  | The
      Chairman of the Board of Directors or the directors serving
      as Chief Executive Officer or as Deputy Managing Director
      may consult the Committee to seek an opinion on the appointment
      or renewal of the statutory and outside auditors.
| |       |                                                                                                                                                                                                                                                                     |                                                                                                                                                      
| | (iii) | The
      Committee shall issue an opinion on LVMHs auditors
      fees.                                                                                                                                                                                         
| |       |                                                                                                                                                                                                                                                                     |                                                                                                                                                      
| | (iv)  | The
      Committee may also make recommendations to the management
      on general priorities and guidelines for the internal audit.                                                                                                                             

| | (i)   | A directors
      agreement to serve on the Committee shall imply that he
      will devote the necessary time and attention.                                                                                                                                                                                                                                                          
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                         
| | (ii)  | The
      Committee shall meet at least twice a year, without the
      Chairman of the Board of Directors or any directors serving
      as Chief Executive or Deputy Managing Director, eight days
      before the Board of Directors meetings in which the
      agenda includes a review of the annual and semi-annual parent
      company and consolidated financial statements.
| |       |                                                                                                                                                                                                                                                                                                                                                                                         
| | (iii) | If
      necessary, the Committee may be required to hold special
      meetings, when an event occurs that may have a significant
      effect on the parent company or consolidated financial statements.                                                                                                                                                                             
| |       |                                                                                                                                                                                                                                                                                                                                                                                         
| | (iv)  | Any
      document submitted to the Committee in connection with its
      responsibilities shall be considered confidential as long
      as it has not been made public by the company.                                                                                                                                                                                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                         
| | (v)   | The
      proceedings of the Committee are confidential and shall
      not be discussed outside the Board of Directors.                                                                                                                                                                                                                                                                
| |       |                                                                                                                                                                                                                                                                                                                                                                                         
| | (vi)  | Decisions
      of the Committee shall be made by simple majority vote and
      shall be deemed to have been reached as a board.                                                                                                                                                                                                                                                       
| |       |                                                                                                                                                                                                                                                                                                                                                                                         
| | (vii) | A report
      shall be made on every meeting of the Committee.                                                                                                                                                                                                                                                                                                                         

Prerogatives of the Committee

| | (i)   | The
      Committee shall report on its work to the Board of Directors.
      It shall submit to the Board its findings, recommendations
      and proposals.                                                                                                                                                                                                                                                 
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                               
| | (ii)  | The
      Committee may request any and all accounting, legal or financial
      documents it deems necessary to carry out its responsibilities.                                                                                                                                                                                                                                                              
| |       |                                                                                                                                                                                                                                                                                                                                                                                                               
| | (iii) | At
      its request, and outside the presence of the Chairman of
      the Board, the Chief Executive Officer or any Deputy Managing
      Director of LVMH, the Committee may interview the executives
      and managers in the company, in particular those who are
      responsible for preparing the financial statements and for
      conducting the internal audit, as well as the outside auditors.

Compensation of Committee members

The
  Committee members and its Chairman may receive a special directors
  fee, the amount of which shall be determined by the Board of
  Directors and charged to the total financial package allocated
  by the Shareholders Meeting.

71



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Nominating and Compensation Committee

The
  Nominating and Compensation Committee is comprised of Messrs.
  Antoine Bernheim, Albert Frère and Kilian Hennessy. Mr.
  Bernheim is chairman of the Committee and was appointed on January
  29, 1998. Mr. Frère was appointed to the Committee on
  January 29, 1998. Mr. Kilian Hennessy was appointed to the Committee
  on January 29, 1998.

The
  Nominating and Compensation Committee met three times in 2002.
  The Committee issued recommendations concerning compensation
  of and stock options granted to LVMHs officers and directors.
  In addition, the Committee gave advice with respect to candidates
  for the Board of Directors.

Internal Rules of the Boards
  Nominating and Compensation Committee

Structure
  of the Committee

| | (i)   | The
      Boards Nominating and Compensation Committee shall
      be made up of at least three directors and/or
      advisors. The majority of its members shall be independent.
      Its members shall be appointed by the
      Board of Directors.                                                                                                  
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                            
| | (ii)  | The
      Board of Directors shall appoint a Chairman of the Committee
      within its members.                                                                                                                                                                                                                                                           
| |       |                                                                                                                                                                                                                                                                                                                                                            
| | (iii) | Neither
      the Chairman of the Board of Directors, nor any directors
      serving as Chief Executive Officer or Deputy Managing Director
      of LVMH, or who are compensated by any LVMH subsidiary,
      may be a member of the committee.                                                                                                         
| |       |                                                                                                                                                                                                                                                                                                                                                            
| | (iv)  | A director
      may not be appointed as a member of the Committee, if the
      Chairman of the Board of Directors or a director serving
      as Chief Executive Officer or Deputy Managing Director of
      LVMH is already a member of a corresponding committee in
      the company in which the first director serves as a corporate
      officer.

Role
  of the Committee

| | (i)    | After
      conferring with the Chairman of the Board of Directors,
      the Committee is responsible for issuing, after review,
      opinions on applications for the positions of director and
      advisor, ensuring that the companys Board of Directors
      includes prominent independent persons outside the company.                                                                                           
| | ------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (ii)   | The
      committees opinion may also be sought by the Chairman
      of the Board of Directors or by any directors serving as
      Chief Executive Officer or Deputy Managing Director, with
      respect to potential members of the groups Executive
      Committee or management positions in its major subsidiaries.                                                                                               
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (iii)  | After
      review, the Committee shall make recommendations on the
      distribution of directors fees paid by the company,
      and on the compensation, in-kind benefits and stock options
      granted to the companys Chairman of the Board, Chief
      Executive Officer and Deputy Managing Director.                                                                                                           
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (iv)   | The
      Committee shall issue an opinion on the compensation and
      in-kind benefits granted to the companys directors
      and advisors by the group or its subsidiaries, and on the
      fixed or variable, immediate or deferred compensation and
      incentive plans for the groups senior executives.                                                                                                        
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (v)    | The
      Committee shall draft and propose to the Board of Directors
      a biographical notice on each director for publication in
      the Annual Report.                                                                                                                                                                                                                                                               
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (vi)   | The
      Committee shall prepare a statement summarizing the directors
      fees actually paid to each director.                                                                                                                                                                                                                                                                                                          
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (vii)  | The
      Committee shall prepare a draft report every year for the
      Annual Shareholders Meeting, which it shall submit
      to the Board of Directors, on the compensation of corporate
      officers and any stock options granted or exercised by said
      officers in the previous year. The report shall also list
      the top ten employees in the company receiving and exercising
      the most options.
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (viii) | Changes
      in compensation shall be tied to performance and the intrinsic
      value of the company.                                                                                                                                                                                                                                                                                                                     



72



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Operating
  procedures of the Committee

| | (i)   | A directors
      agreement to serve on the Committee implies that he will
      devote the necessary time and energy.                                                                                      
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                              
| | (ii)  | The
      Committee shall meet whenever necessary, either at the initiative
      of the Chairman of the Board of Directors, or the director
      serving as Managing Director, or of two Committee members.
| |       |                                                                                                                                                                                                              
| | (iii) | The
      proceedings of the Committee are confidential and shall
      not be discussed outside the Board of Directors.                                                                                     
| |       |                                                                                                                                                                                                              
| | (iv)  | Decisions
      by the Committee shall be made by simple majority vote and
      shall be deemed to have been reached as a board.                                                                            

Prerogatives of the Committee

| | (i)   | The
      Committee shall report on its work to the Board of Directors.
      It shall report to the Board its findings, recommendations
      and proposals.
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                              
| | (ii)  | If
      necessary to carry out their responsibilities, the members
      of the Committee may request any and all available information.                    
| |       |                                                                                                                                                              
| | (iii) | Any
      unfavorable opinion issued by the Committee on any proposal
      must be made on justifiable grounds.                                             



Compensation
  of the members of Committee

The
  members of the Committee and the Chairman may receive a special
  directors fee, the amount of which shall be determined
  by the Board of Directors and charged to the total financial
  package allocated by the Shareholders Meeting.

EMPLOYEES

As
  of December 31, 2002 the total number of employees was 55,812
  as compared to 53,795 as of December 31, 2001 and 51,127 as
  of December 31, 2000. The following table sets forth the number
  of employees, by job category, as of December 31:

|                          |   | 2002   |  | 2001   |  | 2000   | 
|------------------------- | - | ------ |  | ------ |  | ------ | 
|                          |   |        |  |        |  |        | 
|By business group         |   |        |  |        |  |        | 
|Wines and Spirits         |   | 4,801  |  | 5,089  |  | 5,154  | 
|Fashion and Leather Goods |   | 16,323 |  | 13,402 |  | 11,006 | 
|Perfumes and Cosmetics    |   | 13,006 |  | 13,087 |  | 12,758 | 
|Watches and Jewelry       |   | 2,366  |  | 2,233  |  | 1,830  | 
|Selective Retailing       |   | 18,243 |  | 18,542 |  | 18,540 | 
|Other activities          |   | 1,073  |  | 1,442  |  | 1,839  | 
|                          |   |        |  |        |  |        | 
|Total                     |   | 55,812 |  | 53,795 |  | 51,127 | 
|                          |   |        |  |        |  |        | 
|By geographic area        |   |        |  |        |  |        | 
|France                    |   | 20,214 |  | 19,700 |  | 18,374 | 
|Europe (excluding France) |   | 10,671 |  | 10,114 |  | 9,088  | 
|America                   |   | 12,798 |  | 12,019 |  | 12,071 | 
|Japan                     |   | 3,874  |  | 3,462  |  | 2,918  | 
|Asia (excluding Japan)    |   | 8,255  |  | 8,500  |  | 8,676  | 
|                          |   |        |  |        |  |        | 
|Total                     |   | 55,812 |  | 53,795 |  | 51,127 | 
|                          |   |        |  |        |  |        | 
|By category               |   |        |  |        |  |        | 
|Labor and production      |   | 8,979  |  | 9,027  |  | 8,333  | 
|Office and clerical       | . | 31,628 |  | 30,820 |  | 29,105 | 
|Technicians               |   | 5,568  |  | 4,995  |  | 4,630  | 
|Executives and management |   | 9,637  |  | 8,953  |  | 9,059  | 
|                          |   |        |  |        |  |        | 
|Total                     |   | 55,812 |  | 53,795 |  | 51,127 | 
|                          |   |        |  |        |  |        | 



73

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The
  following table provides a percentage breakdown of LVMH personnel
  in France in 2002 by socio-professional category:

|                          | %     | 
|------------------------- | ----- | 
|                          |       | 
|Executives and management | 19.0  | 
|Technicians and foreman   | 15.0  | 
|Office and clerical       | 39.0  | 
|Labor and production      | 27.0  | 
|                          |       | 
|Total                     | 100.0 | 



LVMHs
  hiring policy is based on professional qualifications criteria
  and, depending on the position to be filled, prior experience
  and knowledge of foreign languages. In 2002, in France, 3,167
  people were hired under permanent contracts and 4,835 people
  were hired on a temporary basis. The following table provides
  the breakdown, in percentages, of the total number of employees
  hired by business group:

|Business Group            | %     | 
|------------------------- | ----- | 
|                          |       | 
|Wines and Spirits         | 16.4  | 
|Fashion and Leather Goods | 12.3  | 
|Perfumes and Cosmetics    | 16.7  | 
|Watches and Jewelry       | 1.4   | 
|Selective Retailing       | 52.3  | 
|Other Activities          | 0.8   | 
|                          |       | 
|Total                     | 100.0 | 
|                          |       | 

Some
  employees were hired to replace departing employees. Not including
  the Selective Retailing business group, which traditionally
  has a high rotation rate, 908 employees on permanent contracts
  left in 2002, 42% of which resigned.

In
  2002, the annual amount of overtime per employee did not exceed
  fifty hours.

At
  the end of 1999, or the beginning of 2000, all French companies
  signed agreements enforcing the French law mandating a 35-hour
  work week for employees in France. LVMH implemented these requirements
  in a very short period of time with no adverse effects on its
  labor relations.

In
  2002, 81% of LVMHs French workforce or 16,076 employees
  worked in accordance with flexible work time schemes.

The
  absentee rate of LVMH French employees was 5.6% in 2002. This
  figure is in line with national statistics.

The
  table below shows the gross annual compensation paid in 2002
  to LVMH employees in France under permanent contracts who worked
  for the entire year:

|Gross average
      monthly compensation in 2002 |  | Employees | 
|------------------------------------------------ |  | --------- | 
|                                                 |  |           | 
|(in EUR)                                         |  | Number    | 
|less than 1,500                                  |  | 4,522     | 
|1,500 to 2,250                                   |  | 4,046     | 
|2,250 to 3,000                                   |  | 2,619     | 
|over 3,000                                       |  | 2,904     | 
|                                                 |  |           | 
|Total                                            |  | 14,091    | 
|                                                 |  |           | 

Outsourcing
  and temporary staffing costs were relatively low, accounting
  for only 8.8% of the total payroll in 2002.

The
  following table breaks down personnel costs in France for 2002:

74



---

|Personnel
      Costs          | (EUR
      millions) | 
|------------------------------ | -------------------- | 
|                               |                      | 
|Gross payroll                  | 545.0                | 
|Employers
      contribution  | 251.3                | 
|Temporary staffing
      costs | 35.3                 | 
|Outsourcing costs              | 41.6                 | 
|                               |                      | 
|Total personnel
      costs    | 873.2                | 
|                               |                      | 

All
  companies in France have a profit-sharing, and/or savings plan.
  These plans accounted for a total of EUR 59.3 million for LVMH
  in 2002:

|Plans                                        | (EUR
      millions) | 
|-------------------------------------------- | -------------------- | 
|                                             |                      | 
|Profit sharing                               | 54.5                 | 
|Employer contribution
      to savings plans | 4.8                  | 
|                                             |                      | 
|Total                                        | 59.3                 | 
|                                             |                      | 

LVMH
  employs a significant number of women. On average, in France,
  women account for two-thirds of LVMHs workforce. The following
  table shows the percentage of women employed by LVMH in France
  in 2002 by job category:

|Category                             | %    | 
|------------------------------------ | ---- | 
|                                     |      | 
|Executives and management            | 51.6 | 
|Technicians and
      foremen        | 69.0 | 
|Office and clerical                  | 73.7 | 
|Labor and production                 | 63.6 | 
|                                     |      | 
|Percentage of
      French Employees | 65.6 | 
|                                     |      | 

The
  same repartition between men and women can also be found in
  LVMHs hiring policies. Thus in 2002, out of the 8,000
  people hired in 2002, 68% are women and 65% of recent graduates
  hired by LVMH were women. The following table shows the percentage
  of these newly hired women by job category in 2002:

|Category                      | %    | 
|----------------------------- | ---- | 
|                              |      | 
|Executives and management     | 54.5 | 
|Technicians and
      foremen | 69.3 | 
|Office and clerical           | 75.0 | 
|Labor and production          | 53.7 | 
|                              |      | 
|Percentage of
      new hires | 68.0 | 
|                              |      | 

The
  five recognized French labor unions are represented among LVMHs
  employees in France. As required by French law, management holds
  periodic meetings with employee and union representatives with
  respect to working conditions, salaries and other matters. In
  France, LVMH has work councils (Comités
  dentreprise)
  and employee representatives, as well as health and safety committees.
  The LVMHComité de
  Groupewas formed in 1985.
  In 2002, employee representatives attended over 1,400 meetings.
  The following table provides a breakdown of meetings by category:

|Meetings                               | Number | 
|-------------------------------------- | ------ | 
|                                       |        | 
|Work councils                          | 572    | 
|Employee representative
      meetings | 522    | 
|Health and safety
      committee      | 190    | 
|Other                                  | 189    | 
|                                       |        | 
|Total                                  | 1,473  | 
|                                       |        | 
|                                       |        | 
|                                       |        | 
|                                       |        | 

75



---

As
  a result of these meetings, 79 company-wide agreements were
  signed (such as annual negotiations on wages and work schedules
  and incentive and profit sharing agreements). LVMH believes
  relations with its employees are satisfactory.

In
  2002, in LVMHs operations in France, a total of 548 work
  or work-travel accidents resulting in the relevant employee
  being incapacitated for work purposes resulted in 13,232 lost
  work days. The following table shows, for 2002, the breakdown
  of accidents resulting in such lost work days, by business group:

|                                | Number
      of | 
|------------------------------- | --------------- | 
|Business
      Group            | accidents       | 
|                                |                 | 
|Wines and Spirits               | 117             | 
|Fashion and Leather
      Goods | 58              | 
|Perfumes and Cosmetics          | 143             | 
|Watches and Jewelry             | 3               | 
|Selective Retailing             | 224             | 
|Other Activities                | 3               | 
|                                |                 | 
|Total                           | 548             | 
|                                |                 | 

In
  France, LVMH invested EUR 16 million in health and safety. This
  includes expenses for occupational medicine, small protective
  equipment such as gloves and glasses, and programs for improving
  personal safety and health, such as compliance, the posting
  of warnings and protective devices. These expenditures and investments
  accounted for 2.9% of gross payroll. Over 4,000 people received
  safety training in LVMHs French operations.

The
  businesses of the luxury products industry involve the acquisition
  and development of specific expertise that requires many years
  of training and work experience. Managers must devote a major
  portion of their time to training mid-level managers in the
  management techniques specific to LVMHs businesses. As
  a result, a substantial portion of the training takes place
  on the job on a daily basis and is not factored into the following
  training indicators. Training expenditures by LVMHs French
  operations in 2002 amounted to EUR 21.5 million, or 3.9% of
  the payroll. Average training expenditures per full-time equivalent
  employee was EUR 1,140. Three hundred fifty three thousand hours
  of training were provided in 2002. Over 11,000 employees under
  permanent contracts received at least one day of training during
  the year. In addition, almost 2,000 employees attended a welcome
  or induction session.

In
  LVMHs French operations, disabled workers accounted for
  2% of the total work force in 2002. Services outsourced in France
  to employment centers for disadvantaged persons accounted for
  a total of EUR 1.65 million.

In
  2002, LVMH devoted a budget of EUR 6.6 million to social and
  cultural activities in its French operations, which included
  contributions to LVMHs work councils to arrange trips,
  sponsor photography or painting clubs, libraries and DVD libraries,
  athletic groups, health and fitness programs and the like.

The
  total cost to LVMH of all additional services, catering costs
  and grants to the work councils was EUR 64.6 million. This amount
  is broken down in the following table:

|                                 | (EUR
      millions) | 
|-------------------------------- | -------------------- | 
|                                 |                      | 
|Death and disability             | 6.7                  | 
|Pensions                         | 34.6                 | 
|Health insurance
      companies | 6.3                  | 
|Employee catering
      expenses | 10.4                 | 
|Grants to work councils          | 6.6                  | 
|                                 |                      | 
|Total                            | 64.6                 | 
|                                 |                      | 

Most
  of the products sold by LVMH are Made in France,
  and most of its manufacturing facilities are located in France,
  such asLouis Vuitton,
  Moët & Chandon andParfums
  Christian Dior. Most of
  LVMHs subcontractors are located in France and Italy,
  making it easier for LVMH to ensure compliance with the conventions
  of the International Labor Organization.

76



---

LVMH
  follows a policy of maintaining and developing employment. There
  were no significant collective layoffs in France in 2002.

The
  major companies of LVMH, such asHennessy,Moët & Chandon,Louis VuittonandParfums Christian Dior,
  have facilities in various regions in France and play a major
  role in creating jobs in those regions. For instance,Louis
  Vuittonrecently decided
  to build two new manufacturing facilities in Sainte-Florence
  and Ducey. From Saint Jean de Braye, which is near Orléans,
  to Champagne or Cognac, where LVMH has been located for a long
  time, public relations and communications policies have been
  developed with local authorities, especially in the areas of
  education and employment.

LVMH
  has developed a number of partnerships with management schools,
  such as engineering schools, design schools and schools specializing
  in areas specific to its businesses (such as leather and textile
  design). LVMH gives presentations on the campuses of these schools
  several times a year. A number of the classes taught feature
  lectures by LVMH senior executives.

LVMHs
  recruitment policy includes initiatives for young people without
  degrees and persons in need. Thus,Veuve
  Clicquot Ponsardinhas partnerships with the French national
  agency for employment (Agence
  Nationale pour lEmploi)
  for youth placement internship programs.Moët
  & Chandonbelongs to
  the Enterprises et
  handicap club.Louis Vuittonhas agreements aimed at placing workers with long-term illnesses
  in its workshops. Over 300 qualification, apprenticeship or
  work-study contracts were signed last year.

Taking
  each individual, his or her freedom and dignity, personal growth
  and health into consideration in each decision is the foundation
  of a doctrine of responsibility to which LVMH adheres.

LVMH
  has policies for equal opportunity and treatment irrespective
  of sex, race, religion and political opinion, as defined in
  the conventions of the International Labor Organization. This
  culture and these practices also generate respect for the freedom
  of labor unions, respect for the individual, and the prohibition
  of child and forced labor.

SHARE OWNERSHIP

As
  of June 1, 2003, LVMHs Board of Directors and executive
  officers as a group directly hold in registered form 130,910
  Shares (with 194,315 votes), a total of less than 0.03% of LVMH
  Shares and voting rights.

Options granted by LVMH to members
  of the Board of Directors in 2002:

|                       |                        |                         |  | Exercise
      Price |                             
|---------------------- | ---------------------- | ----------------------- |  | -------------------- | ----------------------------
|Beneficiary            | Date
      of Plan     | Number
      of Options |  | (in
      EUR)       | Option
      Expiration Date
|                       |                        |                         |  |                      |                             
|Mr. Bernard Arnault(1) | January
      22, 2002 | 600,000                 |  | 43.30                | January
      21, 2012      
|Mr. Nicolas Bazire     | January
      22, 2002 | 200,000                 |  | 43.30                | January
      21, 2012      
|Mr. Antonio Belloni    | January
      22, 2002 | 200,000                 |  | 43.30                | January
      21, 2012      
|Mr. Pierre Godé        | January
      22, 2002 | 200,000                 |  | 43.30                | January
      21, 2012      
|Mr. Gilles Hennessy    | January
      22, 2002 | 15,000                  |  | 43.30                | January
      21, 2012      

---

|(1) | As
      of June 1, 2003, Mr. Bernard Arnault holds a total of 5,650,000
      options in LVMHs Shares. The exercise prices of those
      options range from EUR 17.84 to EUR 80.10; and the expiration
      dates vary from March 15, 2004 to January 21, 2013. No other
      LVMH director or member of senior management beneficially
      owns one percent or more of LVMH shares.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In
  2002, no options were exercised by any LVMH corporate officers,
  including members of its Board of Directors.

Options
  granted in 2002 by LVMH to the ten employees who were not members
  of the Board of Directors of LVMH and who received the largest
  number of options :

|                   |                               |  | Exercise
      Price | 
|------------------ | ----------------------------- |  | -------------------- | 
|Date
      of Plan | Total
      Number of Options |  | (in
      EUR)       | 
|                   |                               |  |                      | 
|January 22, 2002   | 505,000                       |  | 43.30                | 

Options
  exercised in 2002 by the ten employees who were not corporate
  officers (including members of the Board of Directors) of LVMH
  and who exercised the largest number of options:

77



---

|                   |                               |  | Exercise
      Price | 
|------------------ | ----------------------------- |  | -------------------- | 
|Date
      of Plan | Total
      Number of Options |  | (in
      EUR)       | 
|                   |                               |  |                      | 
|March 16, 1994     | 760                           |  | 17.84                | 
|March 22, 1995     | 5,750                         |  | 20.89                | 
|May 30, 1996       | 24,400                        |  | 34.15                | 
|May 29, 1997       | 40,850                        |  | 37.50                | 
|January 29, 1998   | 39,325                        |  | 25.92                | 
|January 20, 1999   | 33,550                        |  | 32.10                | 

No
  other information with respect to options held by LVMHs
  Directors or corporate officers has been publicly disclosed.

Options to Purchase Securities
  from Registrant or Subsidiaries

As
  of June 1, 2003, LVMH has 18 stock option plans in effect with
  an option exercise price equal to 95% of the reference market
  price calculated according to French legal requirements. Options
  under each plan are valid for 10 years from the date of the
  plan and become exercisable three years after the date of the
  plan. In certain circumstances, notably in the case of retirement,
  options become immediately exercisable. In addition, the Board
  of Directors in its May 14, 2001 meeting also established an
  exceptional stock option plan known as OPAL for
  a large majority of LVMH employees. This plan has an eight-year
  term, and the options can be exercised after a period of four
  years from the date the plan opened.

Under
  the stock option plan opened on March 18, 1992 that expired
  on March 17, 2002, 36,295 options were exercised in 2002 at
  the price of 20.89 euros per share.

The
  following table provides details for the various LVMH stock
  option plans set up under the authorization granted by the Annual
  Shareholders Meeting on May 25, 1992:

|                   |                 |  |                                    |  |           |  |               |  |                         |  |                            |  | Outstanding
      and | 
|------------------ | --------------- |  | ---------------------------------- |  | --------- |  | ------------- |  | ----------------------- |  | -------------------------- |  | --------------------- | 
|                   |                 |  | Number
      of options granted(1) |  |           |  |               |  | exercisable
      at(2) | 
|                   |                 |  |                                    |  |           |  |               |  |                         | 
|                   | Number
      of |  |                                    |  | corporate |  | top
      ten |  | Exercise
      price    |  | Number
      of options(2) |  | December              | 
|Date
      of plan | beneficiaries   |  | Total                              |  | officers  |  | employees     |  | (EUR)                   |  | exercised
      in 2002    |  | 31,
      2002        | 
|                   |                 |  |                                    |  |           |  |               |  |                         |  |                            |  |                       | 
|                   |                 |  |                                    |  |           |  |               |  |                         |  |                            |  |                       | 
|March 17, 1993     | 548             |  | 49,681                             |  | 21,000    |  | 5,850         |  | 15.40                   |  | 2,623                      |  | 61,512                | 
|March 16, 1994     | 364             |  | 139,031                            |  | 118,300   |  | 5,800         |  | 17.84                   |  | 3,560                      |  | 1,594,680             | 
|June 17, 1994      | 1               |  | 1,250                              |  | -         |  | 1,250         |  | 17.68                   |  | -                          |  | 7,565                 | 
|March 22, 1995     | 395             |  | 256,903                            |  | 96,000    |  | 57,500        |  | 20.89                   |  | 17,750                     |  | 431,870               | 

---

|(1) | Number of shares on
      date of plan, not restated for adjustments related to bonus allotments
      in July 1994 and June 1999 and the March 1994 and July 2000 five-for-one
      stock splits.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Adjusted for the operations
      described in (1).                                                                                                                                                

The
  following table provides details for the various LVMH stock
  option plans set up under the authorization granted by the Annual
  Shareholders Meeting on June 8, 1995:

|                   |                 |  |                                    |  |           |  |               |  |                         |  |                            |  | Outstanding
      and | 
|------------------ | --------------- |  | ---------------------------------- |  | --------- |  | ------------- |  | ----------------------- |  | -------------------------- |  | --------------------- | 
|                   |                 |  | Number
      of options granted(1) |  |           |  |               |  | exercisable
      at(2) | 
|                   |                 |  |                                    |  |           |  |               |  |                         | 
|                   | Number
      of |  |                                    |  | corporate |  | top
      ten |  | Exercise
      price    |  | Number
      of options(2) |  | December              | 
|Date
      of plan | beneficiaries   |  | Total                              |  | officers  |  | employees     |  | (EUR)                   |  | exercised
      in 2002    |  | 31,
      2002        | 
|                   |                 |  |                                    |  |           |  |               |  |                         |  |                            |  |                       | 
|                   |                 |  |                                    |  |           |  |               |  |                         |  |                            |  |                       | 
|May 30, 1996       | 297             |  | 233,199                            |  | 105,000   |  | 46,500        |  | 34.15                   |  | 35,375                     |  | 761,720               | 
|May 29, 1997       | 319             |  | 233,040                            |  | 97,500    |  | 46,000        |  | 37.50                   |  | 58,590                     |  | 1,069,220             | 
|January 29, 1998   | 346             |  | 269,130                            |  | 97,500    |  | 65,500        |  | 25.92                   |  | 49,885                     |  | 1,265,845             | 
|March 16, 1998     | 4               |  | 15,800                             |  | -         |  | 15,800        |  | 31.25                   |  | -                          |  | 86,900                | 
|January 20, 1999   | 364             |  | 320,059                            |  | 97,000    |  | 99,000        |  | 32.10                   |  | 56,845                     |  | 1,684,035             | 
|September 16, 1999 | 9               |  | 44,000                             |  | 5,000     |  | 39,000        |  | 54.65                   |  | -                          |  | 220,000               | 
|January 19, 2000   | 552             |  | 376,110                            |  | 122,500   |  | 81,000        |  | 80.10                   |  | -                          |  | 1,879,550             | 

---

|(1) | Number of shares on date of
      plan, not restated for adjustments related to bonus allotments
      in July 1994 and June 1999 and the March 1994 and July 2000
      five-for-one stock splits.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                    
|(2) | Adjusted for the operations
      described in (1).                                                                                                                                                

78



---

The
  following table provides details for the various LVMH stock
  option plans set up under the authorization granted
  by the Annual Shareholders Meeting on May 17, 2000:

|                   |                 |  |                                    |  |           |  |                         |   |                      |                            | Outstanding
      and | 
|------------------ | --------------- |  | ---------------------------------- |  | --------- |  | ----------------------- | - | -------------------- | -------------------------- | --------------------- | 
|                   |                 |  | Number
      of options granted(1) |  |           |  | exercisable
      at(2) |  
|                   |                 |  |                                    |  |           |  |                         |  
|                   | Number
      of |  |                                    |  | corporate |  | top
      ten           |   | Exercise
      price | Number
      of options(2) | December              | 
|Date
      of plan | beneficiaries   |  | Total                              |  | officers  |  | employees               |   | (EUR)                | exercised
      in 2002    | 31,
      2002        | 
|                   |                 |  |                                    |  |           |  |                         |   |                      |                            |                       | 
|                   |                 |  |                                    |  |           |  |                         |   |                      |                            |                       | 
|January 23, 2001   | 786             |  | 2,649,075                          |  | 987,500   |  | 445,000                 |   | 65.12                | -                          | 2,606,075             | 
|March 6, 2001      | 1               |  | 40,000                             |  | -         |  | 40,000                  |   | 63.53                | -                          | 40,000                | 
|May 14, 2001       | 44,669          |  | 1,105,877                          |  | -         |  | (3                      | ) | 66.00                | -                          | 1,105,877             | 
|May 14, 2001       | 4               |  | 552,500                            |  | 450,000   |  | 102,500                 |   | 61.77                | -                          | 552,500               | 
|September 12, 2001 | 1               |  | 50,000                             |  | -         |  | 50,000                  |   | 52.48                | -                          | 50,000                | 
|January 22, 2002   | 993             |  | 3,284,100                          |  | 1,215,000 |  | 505,000                 |   | (4)43.30             | -                          | 3,276,500             | 
|May 15, 2002       | 2               |  | 8,560                              |  | -         |  | 8,560                   |   | 54.83                | -                          | 8,560                 | 
|January 22, 2003   | 979             |  | 3,213,725                          |  | 1,220,000 |  | 495,000                 |   | (4)37.00             | -                          | 3,213,725             | 

---

|(1) | Number of shares
      on date of plan, not restated for adjustments related to
      bonus allotments in July 1994 and June 1999 and the March
      1994 and July 2000 five-for-one stock splits.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Adjusted for the
      operations described in (1).                                                                                                                                                
|(3) | Twenty-five options
      were granted to each beneficiary.                                                                                                                                        
|(4) | Exercise prices
      for residents of Italy for the plans opened on January 22,
      2002 and January 22, 2003 were respectively 45.70 euros
      and 38.73 euros.                              

The
  following table summarizes the various stock option plan transactions
  that occurred during the years 2002, 2001 and 2000:

Number of
        options
      2002
      
      2001
      
      2000Options outstanding as of
        January 1
      13,725,832
      
      9,769,865
      
      1,670,539Options granted
      3,292,660
      
      4,397,452
      
      376,110Bonus shares allotted
      -
      
      -
      
      -Five-for-one split
      -
      
      -
      
      7,940,376Options exercised
      (260,923
      )
      (437,410
      )
      (213,900
      )Options lapsed
      (55,160
      )
      (4,075
      )
      (3,260
      )Options outstanding as of
        December 31
      16,702,409
      
      13,725,832
      
      9,769,865


As
  of June 1, 2003, options to purchase an aggregate of 10,745,860
  Shares were outstanding under LVMH stock option plans granted
  to members of the Board of Directors or the members of the Executive
  Committee.

All
  of the LVMH stock option plans provide for options to purchase
  treasury Shares.

On
  May 17, 2000, LVMHs shareholders authorized the issuance
  and sale of Shares representing up to 3% of LVMHs outstanding
  share capital at any given time in connection with stock option
  plans. This authorization was renewed for a period of 38 months
  at the Annual Shareholders Meeting of May 15, 2003.

ITEM 7. MAJOR SHAREHOLDERS AND
  RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDERS

As
  of June 1, 2003, Financière Jean Goujon, a Frenchsociété
  anonyme(Jean Goujon),
  owned of record 207,821,325 or 42.42% of the issued share capital
  of LVMH. This amounted to 33.55% of LVMHs fully diluted
  share capital, after taking into account outstanding stock options
  to purchase treasury Shares. Jean Goujon controlled 58.63% of
  the voting rights attributable to these Shares at such date.

As
  of June 1, 2003, Jean Goujon was owned 100% by Christian Dior
  S.A., asociété
  anonymeorganized under
  the laws of France (Christian
  Dior).Christian
  Dioris controlled by Semyrhamis
  SAS, a company organized under the laws of France, itself controlled
  by Financière Agache, asociété
  anonymeorganized under
  the laws of

79

---

France, that is itself controlled
  by Montaigne Finance, a wholly owned subsidiary of Montaigne
  Participations et Gestion S.A., itself controlled by Groupe
  Arnault SAS and members of the Arnault family, including Bernard
  Arnault and his father, Jean Arnault. Bernard Arnault is Chairman
  of the Board of Directors and Chief Executive Officer of LVMH.
  Jean Arnault is a member of LVMHs Board of Directors.

Except
  as disclosed herein, LVMH does not know of any arrangements,
  the operation of which may result in a change in control of
  LVMH.

In
  accordance with French law, shares generally are not represented
  by certificates, and ownership thereof is evidenced by entries
  in share accounts. An owner of shares may elect to have his
  shares held in registered form and inscribed in his name in
  an account maintained by LVMH, or held in bearer form and inscribed
  in his name in an account maintained by an approved intermediary
  (intermédiaire agréé,
  i.e., a French broker, bank or other financial institution).
  In certain circumstances, bearer certificates representing shares
  may be issued, provided such certificates are held and traded
  outside France. At June 1, 2003, 55.66% of all outstanding Shares
  were held in registered form.

The
  following table sets forth information as of June 1, 2003 with
  respect to (i) any person who is known to LVMH to be the owner
  of 5% or more of the Shares or who is known to control 5% or
  more of the votes attributable to the Shares, (ii) the total
  number of registered Shares owned by members of the Moët,
  Mercier and Hennessy families and (iii) the total number of
  registered Shares owned by executive officers and Directors
  of LVMH as a group.

|                     |                                   |                       |  | Percentage
      of  |   | Number
      of Votes |  | Percentage
      of |  
|-------------------- | --------------------------------- | --------------------- |  | -------------------- | - | --------------------- |  | ------------------- | -
|                     |                                   | Shares
      Owned    |  | Shares
      held at |   | held
      at         |  | Votes
      held at |  
|Title
      of Class | Identity
      of Person or Group | at
      June 1, 2003 |  | June
      1, 2003   |   | June
      1, 2003    |  | June
      1, 2003  |  
|                     |                                   |                       |  |                      |   |                       |  |                     |  
|Common stock         | Financière
      Jean Goujon      | 207,821,325           |  | 42.42                | % | 407,303,575           |  | 58.63               | %
|Common stock         | Financière
      Agache           | 24,498,685            |  | 5.00                 | % | 37,871,050            |  | 5.45                | %
|Common stock         | Members of the Moët,              |                       |  |                      |   |                       |  |                     |  
|                     | Mercier and Hennessy              |                       |  |                      |   |                       |  |                     |  
|                     | families                          | 12,146,992            |  | 2.48                 | % | 23,907,874            |  | 3.44                | %
|Common stock         | All executive officers
      and  |                       |  |                      |   |                       |  |                     |  
|                     | Directors as a group              | 130,910               |  | 0.03                 | % | 194,315               |  | 0.03                | %

- two shareholders (Financière
    Jean Goujon and Financière Agache) held at least 5%
    of the capital and voting rights as of December 31, 2002;
- there is no other shareholder
    who owns directly, indirectly, or with another person, 5%
    or more of the capital or voting rights;
- there is no shareholders
    agreement regarding at least 0.5% of the capital or voting
    rights.

As
  of March 1, 2003, LVMH owned 24,495,464 of its own shares, including
  19,944,864 shares for stock option plans, and the balance of
  4,550,600 shares under share buy-back programs. In addition,
  Sofidiv, an LVMH subsidiary, owned 370,000 shares. As required
  by law, these shares are deprived of voting rights.

As
  of December 31, 2002, LVMH employees and employees of affiliated
  companies, as defined by Article L.225-180 of the French Commercial
  Code, owned 33,294 shares of LVMH under company savings plans
  (less than 0.1% of the capital stock).

During
  2002, in accordance with the LVMH by-laws, Société
  Générale and Caisse des Dépôts et
  Consignations informed LVMH that they had exceeded or dropped
  below various thresholds with respect to the capital of LVMH.
  As of December 31, 2002, Société Générale
  and some of its subsidiaries owned 2.88% of the capital and
  2.05% of the voting rights. Caisse des Dépôts et
  Consignations and some of its subsidiaries owned 2.19% of the
  capital and 1.57% of the voting rights. Notice of crossing such
  thresholds are made for information purposes only.

Based
  on registered shareholders and information resulting from a
  Euroclear investigation performed on December 31, 2002 with
  respect to financial institutions holding at least 50,000 LVMH
  shares and limited to shareholders
  owning at least 500 shares, resident and non-resident shareholders
  represented respectively 82.5% and 17.5% of the capital.

80

---

No
  public tender or exchange offer or any price guaranty was made
  by third parties for the Companys shares during the year
  ended December 31, 2002 and to date.

The
  following changes have occurred in the percentage ownership
  of Shares held by major shareholders during the last three years:

|                          | December
      31, 2002 |  | December
      31, 2001 |   | December
      31, 2000 |  
|------------------------- | ----------------------- |  | ----------------------- | - | ----------------------- | -
|                          |                         |  |                         |   |                         |  
|                          |                         |  |                         |   |                         |  
|                          | Number
      of         |  | %
      of              |   | %
      of voting       |  
|Shareholder               | Shares                  |  | capital                 |   | rights                  |  
|                          |                         |  |                         |   |                         |  
|Group Arnault(1)          | 233,717,690             |  | 47.70                   | % | 64.42                   | %
|of
      which:           |                         |  |                         |   |                         |  
|- Financière
      Jean   |                         |  |                         |   |                         |  
|Goujon(2)                 | 207,821,325             |  | 42.42                   | % | 58.71                   | %
|- Financière
      Agache | 24,498,685              |  | 5.00                    | % | 5.44                    | %
|Others                    | 256,719,720             |  | 52.3                    | % | 35.58                   | %
|                          |                         |  |                         |   |                         |  
|Total                     | 489,937,410             |  | 100.00                  | % | 100.00                  | %
|                          |                         |  |                         |   |                         |  

---

|(1) | Held directly and
      indirectly. In 2002, Groupe Arnault SAS acquired 0.19% of
      the capital of the company on the French Stock Exchange.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | In 2001, Financière
      Jean Goujon bought back 1.70% of the capital of LVMH fromChristian Dior.                                              

The
  following table shows the percentage ownership of Shares held
  by major shareholders as of June 1, 2003:

|                               |  |                        |  | June
      1, 2003 |   |                          |  
|------------------------------ |  | ---------------------- |  | ------------------ | - | ------------------------ | -
|                               |  |                        |  |                    |   |                          |  
|Shareholder                    |  | Number
      of Shares |  | %
      of capital |   | %
      of voting rights |  
|                               |  |                        |  |                    |   |                          |  
|Group Arnault(1)               |  |                        |  |                    |   |                          |  
|of
      which:                |  | 234,217,590            |  | 47.81              | % | 64.43                    | %
|- Financière
      Jean Goujon |  | 207,821,325            |  | 42.42              | % | 58.63                    | %
|- Financière
      Agache      |  | 24,498,685             |  | 5.00               | % | 5.45                     | %
|Others                         |  | 255,719,820            |  | 52.19              | % | 35.57                    | %
|                               |  |                        |  |                    |   |                          |  
|Total                          |  | 489,937,410            |  | 100                | % | 100                      | %
|                               |  |                        |  |                    |   |                          |  

---

|(1) | Held directly and
      indirectly.
|--- | -----------------------------------

Each
  Share confers on its holder the right to one vote, although
  pursuant to LVMHsstatutsa double voting right
  is granted to holders of (i) fully paid up Shares for which
  evidence of registration under the name of the same shareholder
  during the last three years is presented and (ii) registered
  Shares allocated upon a capital increase by capitalization of
  reserves, of profits carried forward or of issuing premiums
  due to existing Shares for which such holder was entitled to
  the benefit of this double voting right. LVMHs major shareholders
  do not have voting rights different from any other shareholders.

To
  the best of LVMHs knowledge, after having made a partial
  shareholder identification, 149 record holders were U.S. residents,
  holding a total of 11,949,366 Shares, representing 2.43% of
  all outstanding LVMH Shares as of December 31, 2002. This figure
  may not be entirely accurate because LVMH can obtain only limited
  information regarding the current holding of its Shares by United
  States residents.

81



---

The following is a chart of the
  holding and control structure of the LVMH group as of June 1,
  2003:





---

|(1) | Direct or indirect
      shareholding                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Company quoted
      on the primary market of the Paris Stock Exchange.                                                                                                                                     
|(3) | Direct or indirect
      shareholding of the Arnault group, with Financière
      Jean Goujon directly holding 42.42%, Financière Agache
      5% and Group Arnault SAS and various companies holding 0.39%.

LVMH
  is not directly or indirectly owned or controlled by any other
  natural or legal person, corporation or by any government and
  knows of no arrangements, the operation of which may at a subsequent
  date result in a change in control of LVMH.

RELATED PARTY
  TRANSACTIONS

Interest of Management in Certain
  Transactions

On
  May 12, 1999, the LVMH Board of Directors authorized the execution
  of a services agreement with Montaigne Participations and Gestion,
  pursuant to which Montaigne Participations and Gestion provides
  to LVMH the services of experienced staff, qualified in development,
  financing, corporate law and real estate. The annual fee paid
  by LVMH to Montaigne Participations and Gestion pursuant to
  this services agreement in 2002 amounted to EUR 2.5 million;
  the amount for 2003 has been increased to EUR 3.4 million (excluding
  VAT).

Since
  1999,Christian Dior Couturehas rented offices located at avenue Montaigne, 75008 Paris
  (522 m2) to LVMH. In 2002, the annual rent paid by LVMH for
  these offices was EUR 231,461 (excluding VAT), increased by
  rental charges of EUR 123,124 (excluding VAT).

In
  1999, LVMH implemented a supplementary retirement plan for the
  members of its Executive Committee, certain of whom are also
  Directors. The financing of such plan is made through contributions
  by LVMH paid to an insurance company.

In
  December 2001, LVMH granted a guarantee to Crédit Lyonnais
  regarding any commitment which may be made by LVMH BV to Crédit
  Lyonnais pursuant to the Sale, Assignment and Earn Out Agreement
  dated December 17, 2001 between LVMH, LVMH BV and Crédit
  Lyonnais relating to the sale of LVMH BVs shareholding
  in Gucci.

82



---

In
  2001, Sofidiv UK Ltd, an LVMH subsidiary, formed a 50/50 joint
  venture, De Beers LV Ltd (DBLV) with an entity of
  the DTC (De Beers) Group (DTC). The DBLV Agreements,
  including the DBLV Shareholders Agreement, were signed on January
  16, 2001, and the transaction was closed on July 27, 2001. Under
  the DBLV Shareholders Agreement, LVMH generally guarantees to
  DTC the performance by any LVMH subsidiary of all of such entities
  obligations, commitments and undertakings under the DBLV Agreements.
  This includes a maximum financing by LVMH of DBLV equal to USD
  200 million over ten years.

In
  2001, DBLV entered into a Lease Agreement relating to properties
  located at 45-50 Old Bond Street and 57-60 Piccadilly in London.
  DTC has agreed to guaranty to the lessor the performance by
  DBLV of all its obligations under such Lease Agreement. In consideration
  for DTC guaranteeing DBLVs obligations under the LeaseAgreement, LVMH has entered
  into an Indemnity Agreement pursuant to which LVMH undertakes
  to indemnify DTC up to one half of its liabilities under the
  Lease Agreement.

In
  2002, DBLV entered into a Lease Agreement relating to properties
  located in the St Regis Hotel located at Two East 55thStreet, 5thAvenue in New York. LVMH has agreed to guaranty to the lessor
  the performance by DBLV of all of its obligations under such
  Lease Agreement. In consideration for LVMH guaranteeing DBLVs
  obligations under the Lease Agreement, DTC has entered into
  an Indemnity Agreement pursuant to which DTC undertakes to indemnify
  LVMH up to one half of its liabilities under the Lease Agreement.

In
  2002, DBLV entered into a Consulting Agreement with Zman, Inc.
  pursuant to which Iman is to act as DBLVs style icon.
  In connection therewith, LVMH has agreed to guaranty to Zman,
  Inc. the full payment of any sum due by DBLV to Zman, Inc. under
  the Consulting Agreement, up to a maximum amount equal to USD
  4 million. In consideration for this, DTC has entered into an
  Indemnity Agreement pursuant to which DTC undertakes to indemnify
  LVMH up to one half of its liabilities under the Consulting
  Agreement and the Guaranty.

On
  March 6, 2002, the LVMH Board of Directors authorized an agreement
  with Christian Dior SA regarding the provision of certain legal
  services to Christian Dior SA for an annual fixed fee of EUR
  45,750 (excluding VAT).

In
  March 2003, LVMH granted a guarantee to the benefit of JP Morgan
  Chase Bank for a maximum amount of USD 14 million in connection
  with a loan made by JP Morgan Chase Bank to Millennium Import
  LLC.

INTERESTS OF EXPERTS
  AND COUNSEL

Not applicable.

ITEM 8. FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS
  AND OTHER FINANCIAL INFORMATION

See Item 17 for LVMHs Consolidated
    Financial Statements.

Legal Proceedings

In
  the ordinary course of its business LVMH is a party from time
  to time to legal proceedings and claims involving trademarks
  and intellectual property, selective distribution agreements,
  licensing, employee relations, tax audits and other matters
  incidental to its business. While the outcome of those proceedings
  and claims that are now pending is not known at this time, LVMH
  believes that the resulting liability, if any, net of amounts
  recoverable from insurance or otherwise, will not be materially
  adverse to the consolidated results of operations or financial
  condition of LVMH. Furthermore, LVMH believes that the provisions
  provided in the balance sheet for these contingencies, disputes
  or litigated situations known or ongoing at the balance sheet
  date, are sufficient to prevent a material impact on LVMHs
  consolidated financial situation in the event of an unfavorable
  outcome.

LVMH
  products are the subject of trademark infringement and unauthorized
  distribution. For a further discussion of the effects of such
  trademark infringement and unauthorized distribution on LVMHs
  business and a discussion of how LVMH protects its intellectual
  property and fights the sale of its products in unauthorized
  distribution networks, see Item 3  Key Information
   Risk Factors.

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LVMH
  also continues its actions aimed at curtailing unauthorized
  retail, which can considerably damage the image of its brands.
  At the same time, an in-depth policy has been developed to help
  group brands gain better control over their retail networks.

On
  October 30, 2002, LVMH initiated legal proceedings, against
  Morgan Stanley before the Paris Commercial Court to obtain damages
  for the injury, estimated at EUR 100 million, caused by the
  inaccurate statements and biased analyses and publications distributed
  by this bank regarding LVMH. The oral arguments may take place
  within nine to 18 months, with a judgment to be rendered a few
  weeks after that.

Dividend Policy

In
  December 2002, LVMH paid an interim dividend of EUR 0.22. The
  Board of LVMH proposed, the shareholders at the annual meeting
  held on May 15, 2003 approved and LVMH paid on May 28, 2003,
  total annual cash dividends in respect of the year 2002 of EUR
  392 million, before elimination of the effect of treasury Shares
  (or EUR 0.80 per Share, not includingavoir
  fiscal). This dividend distribution was 6.7% greater than
  that paid by LVMH for 2001.

Pursuant
  to French law, the annual meeting of shareholders at which annual
  dividends may be approved must be held within six months after
  LVMHs fiscal year-end. If earnings are sufficient, LVMHs
  Executive Board has the ability, without shareholder approval,
  to declare and pay interim dividends.

The
  following tables set forth the amounts of interim, final and
  total dividends per Share of common stock in euros (adjusted
  for all stock distributions, stock splits and bonus share issuances
  adjusted for the bonus Shares issued as of June 21, 1999 (one
  for ten) and for the stock split (five for one) which took effect
  on July 3, 2000) declared by LVMH.

|                             |  | EUR
      per Share(1) |  | Dollar
      per Share(3) | 
|---------------------------- |  | ---------------------- |  | ------------------------- | 
|                             |  |                        |  |                           | 
|Year
      Ended December 31 |  | Interim                |  | Final                     | 
|                             |  |                        |  |                           | 
|1998                         |  | 0.175                  |  | 0.443                     | 
|1999                         |  | 0.200                  |  | 0.480                     | 
|2000                         |  | 0.220                  |  | 0.530                     | 
|2001                         |  | 0.220                  |  | 0.530                     | 
|2002(2)                      |  | 0.220                  |  | 0.580                     | 

---

|(1) | Not including an
      avoir fiscal payment from the French Treasury, with
      respect to dividends, to which certain holders of Shares
      and certain United States holders of ADRs were entitled.
      (See Item 10  Additional Information 
      Taxation below).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Final dividend
      paid on May 28, 2003.                                                                                                                                                                                                                                     
|(3) | Dividends in dollars
      translated for your convenience at noon buying rate effective
      on date of payment.                                                                                                                                                             

Dividends
  paid to holders of Shares who are citizens or residents of the
  United States and to certain United States domestic corporations
  generally will be subject to French withholding tax pursuant
  to a Treaty between France and the United States. (See Item
  10  Additional Information  Taxation
  below.)

For
  a further discussion of LVMHs dividend policy, see Item
  5.  Operating and Financial Review and Prospects
   Liquidity and Capital Resources.

Future
  dividend policy is at the discretion of the Executive Board
  and the shareholders of LVMH and will depend upon LVMHs
  earnings, capital requirements, financial condition and other
  relevant factors.

SIGNIFICANT CHANGES

None.

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ITEM 9. THE OFFER AND LISTING

OFFER AND LISTING
  DETAILS

Price Information on Euronext
  Paris

The
  table below shows the high and low prices for the Shares on
  the monthly settlement market of the Bourse de Paris (Paris
  Bourse, now called Euronext Paris) for the periods indicated
  (in each case as adjusted for stock splits, stock dividends
  and bonus share issuances).

|                      |  | Price
      per Share(1) | 
|--------------------- |  | ------------------------ | 
|                      |  |                          | 
|Calendar
      Period |  | High                     | 
|                      |  |                          | 
|                      |  | (in
      EUR)(2)        | 
|                      |  |                          | 
|1998                  |  | 38.22                    | 
|1999                  |  | 91.48                    | 
|2000                  |  | 98.70                    | 
|2001                  |  | 75.50                    | 
|2002                  |  | 61.60                    | 
|2001                  |  |                          | 
|First Quarter         |  | 75.50                    | 
|Second Quarter        |  | 71.25                    | 
|Third Quarter         |  | 61.00                    | 
|Fourth Quarter        |  | 50.15                    | 
|2002                  |  |                          | 
|First Quarter         |  | 61.60                    | 
|Second Quarter        |  | 61.55                    | 
|Third Quarter         |  | 51.70                    | 
|Fourth Quarter        |  | 49.46                    | 
|2002                  |  |                          | 
|December              |  | 49.46                    | 
|2003                  |  |                          | 
|January               |  | 41.90                    | 
|February              |  | 40.94                    | 
|March                 |  | 43.45                    | 
|April                 |  | 41.00                    | 
|May                   |  | 44.11                    | 
|                      |  |                          | 

---

|(1) | Stock prices and
      volumes adjusted, where appropriate, by the bonus share
      distribution of June 21, 1999 and the five for one split
      on July 3, 2000.                                                                                                      
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Share prices for
      1998 relate to periods prior to the adoption of the euro
      by France on January 1, 1999. For presentation purposes,
      euro amounts have been translated from French francs at
      the legal rate of conversion of EUR 1.00 = FRF 6.55957.

On
  June 16,2003, the closing sale price of the Shares on Euronext Paris
  was EUR 45.45.

At
  December 31, 2002 there were 489,937,410 Shares issued and outstanding
  (including 24,123,009 Shares held as treasury Shares). On June
  16, 2003 there were 489,937,410 Shares outstanding (including
  21,614,377 Shares held as treasury Shares).

Price Information for LVMH ADSs

LVMH
  Shares were traded in the United States in the form of ADSs
  through the NASDAQ National Market System through October 18,
  2002. Thereafter, LVMH voluntarily delisted its ADSs from the
  NASDAQ National Market System and has terminated its ADR program
  pursuant to which its ADSs were evidenced by ADRs issued by
  the Depositary, The Bank of New York under a Deposit Agreement
  dated September 20, 1993 among LVMH, the Depositary and the
  holders from time to time of ADRs.

After
  November 25, 2002, the effective termination date of the LVMH
  ADR program, the Depositary was no longer required to issue,
  transfer or pay dividends on ADRs. The Depositary collected
  and held for the benefit of

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LVMH ADR holders any dividends paid
  during the six months following the effective termination date.
  During this six month period, ending May 25, 2003 ADR holders
  were permitted to cancel their ADRs and receive the corresponding
  amount of LVMH Shares along with any accrued dividends, if applicable.
  After May 25, 2003, in accordance with the Deposit Agreement,
  the Depositary sold the total amount of Shares corresponding
  to the ADRs then outstanding under the LVMH sponsored program;
  exchanged all proceeds from all trades together with any accrued
  dividends into U.S. dollars; set a U.S. dollar rate per ADR;
  announced that rate to the market; and will make payment to
  holders of LVMH sponsored ADRs upon surrender of such ADRs to
  the Depositary.

Although
  LVMH ADRs continue to trade in the over the counter market in
  the United States, after November 25, 2002, none of the ADRs
  trading over the counter were issued under the LVMH sponsored
  ADR program. As of June 16, 2003, 1,394,920 ADRs issued under
  the LVMH sponsored program remained outstanding.

The
  table below shows the high and low prices of LVMHs ADSs
  for each quarter, for the periods indicated, as quoted on the
  NASDAQ National Market System (in each case as adjusted for
  stock splits, stock dividends and bonus share issuances) up
  until October 18, 2002, the last day on which LVMH ADSs were
  traded on the NASDAQ National Market System.

|                      | NASDAQ
      National Market System
|--------------------- | -----------------------------------
|                      |                                    
|                      | $
      per ADS                    
|                      |                                    
|Calendar
      Period |                                    
|                      |                                    
|1998                  |                                    
|1999                  |                                    
|2000                  |                                    
|2001                  |                                    
|2002                  |                                    
|2001                  |                                    
|First
      Quarter   |                                    
|Second
      Quarter  |                                    
|Third
      Quarter   |                                    
|Fourth
      Quarter  |                                    
|2002                  |                                    
|First
      Quarter   |                                    
|Second
      Quarter  |                                    
|Third
      Quarter   |                                    

On
  October 18, 2002, the closing price of the ADSs on the NASDAQ
  National Market System was $8.38.

PLAN OF DISTRIBUTION

Not
  applicable.

MARKETS

Trading on Euronext Paris

The
  principal market for the Shares is Euronext Paris, on which
  the Shares have traded under the LVMH name since October 23,
  1987. Prior thereto,Moët-HennessyandLouis Vuittonshares had been listed on the Paris Bourse since 1962 and 1984,
  respectively. The Shares have traded in the continuous market
  (marché continu)
  of the Paris Bourse (now called Euronext Paris) since January
  22, 1988.

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Securities
  approved for listing by Euronext Paris are traded in one of
  the three Euronext Paris markets. The securities of most large
  public companies are listed on thepremier marché,
  with thesecond marchéavailable for small and medium-sized companies. Trading on thenouveau marchéwas introduced in March 1996 to allow smaller capitalization
  and start-up companies seeking development capital to access
  the stock market. Aside from these regulated markets, securities
  of certain other companies are traded on a non-regulated over-the-counter
  market, themarché
  libre(OTC). Securities
  listed on Euronext Paris are placed in one of two categories
  depending on the volume of transactions. The Common Shares A
  are currently listed in the category known asContinu, which includes the most actively traded securities.

Securities
  listed on thepremier marchéof Euronext Paris are officially traded through authorized financial
  institutions that are members of Euronext Paris and are traded
  continuously on each business day from 9:00 a.m. to 5:25 p.m.
  (Paris time), with a fixing at 9:00 a.m. and at 5:30 p.m. and
  a pre-opening session from 7:15 a.m. to 9:00 a.m. and a pre-closing
  session from 5:25 p.m. to 5:30 p.m. during which orders are
  gathered but not executed, and a closing auction at 5:30 p.m.
  Any trade of a security that occurs after a stock exchange session
  closes is recorded on the next business day at the previous
  sessions closing price for that security. Euronext Paris
  publishes a daily Official Price List that includes price information
  concerning listed securities.

Euronext
  may suspend trading in a security listed on thepremier
  marchéif the quoted
  price of the security exceeds certain price limits defined by
  the regulations of Euronext Paris. In particular, if the quoted
  price of aContinusecurity,
  varies by more than 10% from the opening price (except at the
  opening where the reference price is the previous days
  closing price), Euronext may suspend trading in that security
  for up to 4 minutes. Further suspensions for up to 4 minutes
  are possible if the price again varies by more than 10% from
  a new reference price equal to the threshold crossed by the
  price that caused the first trading suspension. Euronext also
  may suspend trading of a security listed on thepremier
  marchéin certain
  other limited circumstances, including, for example, where there
  is unusual trading activity in the security or where there is
  a sudden change of greater or less than 2% on the last traded
  price of the security. In addition, in certain exceptional circumstances
  theConseil des marchés
  financiersmay also suspend
  trading.

Trades
  of securities listed on thepremier
  marchéare settled
  on a cash basis on the third trading day following the trade
  and are considered to be transferred on that date. Market intermediaries
  are also permitted to offer investors a deferred settlement
  service (service de réglement
  différé)
  for a fee. LVMH is eligible for such a service. The deferred
  settlement service is only available for trades in securities
  which either (1) are a component of the Index SBF 120 or (2)
  have both a total market capitalization of at least EUR 1 billion
  and a daily average volume of trades of at least EUR 1 million.
  Investors can elect on the determination date (date
  de liquidation), which is the fifth trading day before the
  end of the month, either to settle the trade by the last trading
  day of the month or to pay an additional fee and postpone the
  settlement decision to the determination date of the following
  month.

Equity
  securities traded on a deferred settlement basis are considered
  to have been transferred only after they have been registered
  in the purchasers account. Under French securities regulations,
  any sale of a security traded on a deferred settlement basis
  during the month of a dividend payment date is deemed to occur
  after the dividend has been paid. If the sale takes place before,
  but during the month of, a dividend payment date, the purchasers
  account will be credited with an amount equal to the dividend
  paid and the sellers account will be debited by the same
  amount.

Trading on NASDAQ

LVMH
  Shares were traded in the United States in the form of ADSs
  through the NASDAQ National Market System through October 18,
  2002. Thereafter, LVMH voluntarily delisted its ADSs from the
  NASDAQ National Market System and has terminated its ADR program
  pursuant to which its ADSs were evidenced by ADRs issued by
  the Depositary, The Bank of New York under a Deposit Agreement
  dated September 20, 1993 among LVMH, the Depositary and the
  holders from time to time of ADRs.

After
  November 25, 2002, the effective termination date of the LVMH
  ADR program, the Depositary was no longer required to issue,
  transfer or pay dividends on ADRs. The Depositary collected
  and held for the benefit of LVMH ADR holders any dividends paid
  during the six months following the effective termination date.
  During this

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six month period, ending May 25,
  2003, ADR holders were permitted to cancel their ADRs and receive
  the corresponding amount of LVMH Shares along with any accrued
  dividends, if applicable. After May 25, 2003, in accordance
  with the Deposit Agreement, the Depositary sold the total amount
  of Shares corresponding to the ADRs then outstanding under the
  LVMH sponsored program; exchanged all proceeds from all trades
  together with any accrued dividends into U.S. dollars; set a
  U.S. dollar rate per ADR; announced that rate to the market;
  and will make payment to holders of LVMH sponsored ADRs upon
  surrender of such ADRs to the Depositary.

SELLING SHAREHOLDERS

Not
  applicable.

DILUTION

Not
  applicable.

EXPENSES OF THE
  ISSUE

Not
  applicable.

ITEM 10. ADDITIONAL INFORMATION

SHARE CAPITAL

Not
  applicable.

MEMORANDUM AND
  ARTICLES OF ASSOCIATION

Registration

LVMH
  is registered in theRegistre
  du Commerce et des Sociétés de Parisunder reference number 775 670 417 Paris.

Objects of LVMH

LVMHs objects, as set forth
  in Article 2 of itsstatuts,
  are as follows:

|(i)  | Any
      taking of interests by way of direct or indirect participation,
      contribution, merger, division or alliance in any corporation
      or group, existing or to be created, operating any commercial,
      industrial, agricultural or financial operations, and among
      others:
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | •                                                                                                                                                                                                                                                                                                 
|     | •                                                                                                                                                                                                                                                                                                 
|     | •                                                                                                                                                                                                                                                                                                 
|     | •                                                                                                                                                                                                                                                                                                 
|     | •                                                                                                                                                                                                                                                                                                 
|     | •                                                                                                                                                                                                                                                                                                 
|(ii) | More
      generally to undertake directly any commercial, industrial,
      financial, agricultural, viticultural operation, or any
      operation relating to movable or immovable property, management
      or service in any of the fields of activities described
      under (i) above.   

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Directors

According
  to LVMHsstatuts,
  the Board of Directors sets guidelines for LVMHs activities
  and ensures implementation of such guidelines. Subject to the
  powers expressly granted to the general meetings of shareholders
  and within the limits of the corporate purpose, the Board of
  Directors addresses any issue relating to LVMHs proper
  operation and settles affairs concerning LVMH through Board
  resolutions.

Each
  Director is entitled to one vote and decisions of the Board
  are made by a majority of votes of Directors present or represented
  at a duly convened Board meeting. In the event of a tie vote,
  the Chairmans vote is the deciding vote. French company
  law expressly requires prior Board approval by majority vote
  of Directors present or represented (the concerned Director
  abstaining from voting) at a duly convened Board meeting for
  any agreement to be entered into between LVMH and one of its
  Directors or a company in which one if its Directors is owner,
  partner with unlimited liability, manager, director, managing
  director or member of the executive or supervisory board. The
  same shall be held for any agreement entered into with a shareholder
  holding a proportion of voting rights greater than 5% or with
  any company which holds more than 5% of LVMHs capital.

In
  accordance with French company law, LVMHsstatutsprovide that the shareholders, in the general meeting of shareholders,
  determine the amount of attendance fees to be paid to Directors
  as remuneration for their services. The Board shall divide the
  amount of these attendance fees among its members as it deems
  fit. The Board may also authorize the reimbursement of travel
  fare and expenses incurred by Directors in the interest of LVMH.
  The Board may allow special payments to Directors for projects
  assigned or delegated to them in accordance with thestatuts. These
  special payments, to be included in the operating expenses of
  LVMH, may be subject to prior Board approval in accordance with
  article 19 of LVMHsstatuts. Other
  than Directors attendance fees, travel fare and expenses, any
  special payments or salaries (of the Directors who are also
  employees) and the consideration paid to the Chairman or the
  Director temporarily delegated in the duties of Chairman, the
  managing director, and as applicable, the deputy managing director,
  no other consideration may be paid to the Directors.

Directors,
  other than legal entities are prohibited from contracting loans
  from LVMH in any form whatsoever. Directors which are legal
  entities may receive loans from LVMH as long as any such loan
  is approved by the Board of Directors by majority vote of Directors
  present or represented (the concerned Director abstaining from
  voting) at a duly convened Board meeting in accordance with
  thestatuts.

Thestatutsprohibit the Board from having more than one third of its members
  be older than 70 years. In addition, no person who is older
  than 65 may serve as Chairman of the Board. Any Chairman who
  reaches 65 while still in office shall be deemed to have resigned
  from office automatically.

Thestatutsrequire
  that each Director own at least 20 Shares and the charter of
  the Board of Directors requires that each Director own at least
  500 Shares, in each case, in registered form.

Rights, preferences and restrictions
  attaching to Shares

LVMH
  currently has one class of shares, consisting of ordinary shares
  with a nominal value of EUR 0.30 per share (each, a Share).
  Thestatutsprovide
  that fully paid up Shares may be in registered or bearer form,
  at the shareholders option. Shares not fully paid up may
  be in registered form only.

When
  the owner of the Shares is not a French resident, within the
  meaning of French Civil Code, any intermediary may be registered
  on behalf of such owner. Such registration may be made in the
  form of a joint account or several individual accounts, each
  corresponding to one owner. At the time such account is opened
  through either the issuing company or the financial intermediary
  authorized as account holder, the registered intermediary shall
  be required to declare his capacity as intermediary holding
  Shares on behalf of another party.

The
  Shares entered into accounts are freely transferable by transfer
  from one account to another. Prior approval of the transferee
  is required only for partly paid up Shares. All costs resulting
  from the transfer shall be borne by the transferee. Shares with
  payments in arrears are not admitted to transfer.

LVMH
  distributable profits consist of the net income in each fiscal
  year, as increased or reduced by any profit or loss carried
  forward from prior years and, as reduced by the legal reserve
  fund allocation described below.

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Under
  French law, LVMH is required to contribute a minimum of 5% of
  annual net income in each fiscal year, after reduction for losses
  carried forward from previous years, if any, to a legal reserve
  fund. This minimum contribution is no longer required if and
  so long as LVMH maintains a legal reserve equal to 10% of the
  aggregate nominal value of its issued share capital. The legal
  reserve is distributable only upon LVMHs liquidation.

Subject
  to the decision of LVMH shareholders, an initial dividend equal
  to 5% of the fully paid-up but non-amortized nominal value of
  the Shares is set off from distributable profits and paid to
  shareholders.

The
  shareholders may decide to allocate all or part of any distributable
  profits remaining after payment of the initial dividend to carry
  them forward to the next fiscal year as retained earnings, or
  to allocate them to the creation of free, ordinary or extraordinary
  reserves, or to allocate them to the shareholders as additional
  dividends.

Furthermore,
  the general shareholders meeting may decide the distribution
  of amounts of such reserves it may dispose of, either to provide
  for or complete a dividend or as an exceptional distribution.
  In such case, the resolution shall expressly indicate the reserve
  to which these payments shall be allocated. However, the dividends
  shall be set off by priority from the distributable earnings
  of the financial year.

The
  ordinary general meeting of shareholders shall determine the
  terms of payment of dividends. However, if it fails to do so,
  the Board of Directors shall make such determination. These
  distributions are subject to the requirements of French law.
  Dividends must be declared payable no more than nine months
  after the close of the financial year, unless such period is
  extended by court order. Shareholders may be forced to repay
  dividends if (i) the distribution was made in violation of law
  and (ii) LVMH presents evidence that the beneficiaries knew
  of or could not ignore the irregularity of the distribution
  at the time it was made. No action for repayment of dividends
  may be brought after ten years from the date on which the dividends
  became payable. Dividends may not be paid after five years from
  the date on which they became payable.

The
  rights and obligations attached to a Share follow the Share
  to any transferee to whom it may be transferred and the transfer
  includes all the payable and unpaid dividends and dividends
  to be payable, as well as, as the case may be, the corresponding
  share in the reserve funds and provisions.

The
  right to vote is attached by law to each Share and the voting
  right attached to each Share is proportional to the share of
  the capital such Share represents. However, a double voting
  right is granted to holders of (i) fully paid up Shares for
  which evidence of registration under the name of the same shareholder
  during the last three years is presented and (ii) registered
  Shares allocated upon a capital increase by capitalization of
  reserves, of profits carried forward or of issuing premiums
  due to existing Shares for which such holder was entitled to
  the benefit of this double voting right. This double voting
  right shall automatically terminate where registered Shares
  are converted into bearer Shares and/or conveyed in property.
  However, no transfer by right or inheritance, by way of liquidation
  of community property between spouses or deed of giftinter
  vivosto the benefit of a spouse or an inheritor
  shall interrupt the three year holding period or cause the double
  voting right to end.

In
  addition to the right to vote, each Share also carries a right
  to a share of corporate assets, profits, and liquidation surplus,
  in each case proportional to the number and nominal value of
  the existing Shares.

The
  capital of LVMH may be increased by a resolution of the extraordinary
  general meeting of shareholders. However, when the increase
  of capital is completed by way of capitalization of reserves,
  profits or issue premiums, the general meeting of shareholders
  shall vote in accordance with the quorum and majority requirements
  of the ordinary general meetings of shareholders.

The
  amounts to be paid for any Shares to be subscribed for in cash
  pursuant to an increase in capital are payable as provided by
  the extraordinary general meeting of shareholders. Upon subscription,
  the initial payment is of at least one fourth of the nominal
  value of the Shares. The issue premium, if any, must be paid
  in whole upon subscription. The balance of the nominal value
  of the Shares shall be paid, as provided by the Board of Directors,
  once or several times, not later than five years from the date
  at which the increase in capital was completed. Calls for funds
  shall be notified to the shareholders eight days before the
  time fixed for each payment, either by registered letter with
  acknowledgment of receipt or by a notice inserted in a legal
  gazette published where the registered office is located. Sums
  payable for the unpaid part of any Shares are subject to a daily
  interest charge of 5 % per annum, without need of Court action,
  as from the date at which such payment was due.

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Changing shareholder rights

A
  two-thirds majority vote of the extraordinary general meeting
  of shareholders is required to change LVMHsstatuts, which, in addition to what is provided for by French
  law, set out the rights attaching to the Shares. When there
  are several classes of Shares, the rights attached to the Shares
  of one class cannot be modified without a two-thirds majority
  vote of an extraordinary general meeting of shareholders open
  to all shareholders. In addition, no such modification may occur
  without a proper vote of a duly convened special meeting of
  the sole owners of the Shares of the class concerned.

Convocation of ordinary and extraordinary
  general meetings

In
  accordance with French law, there are two types of shareholders'
  general meetings: ordinary and extraordinary. In ordinary general
  meetings, all decisions which do not amend the by-laws may be
  taken and such ordinary general meetings are required for matters
  such as the election of Directors, the appointment of statutory
  auditors, the approval of annual accounts, the declaration of
  dividends and the issuance of debt. Extraordinary general meetings
  are required for the approval of matters such as amendments
  to LVMHsstatuts,
  approval of mergers, increases or decreases in share capital,
  the creation of a new class of equity securities and the authorization
  of the issuance of investment certificates or securities convertible
  or exchangeable into equity securities.

In
  accordance with French company law, LVMHsstatutsrequire ordinary general meetings of shareholders to be held
  at least once a year, within six months of the end of each financial
  year to vote on LVMHs accounts for that financial year.
  General meetings of shareholders shall be convened and held
  as provided by law. The agenda of each meeting shall be mentioned
  on the convening notice and letters and is set by the corporate
  body convening the meeting.

Resolutions
  are validly passed in ordinary general meetings of shareholders,
  convened upon first notice, when a quorum of shareholders holding
  at least one quarter of voting Shares are present or represented.
  Deliberations of an ordinary general meeting of shareholders,
  convened upon second notice, shall be valid regardless of the
  number of shareholders present or represented. Resolutions of
  ordinary general meeting of shareholders are passed by a majority
  of the votes of the shareholders present or represented.

In
  accordance with French company law and LVMHsstatuts,
  the quorum, upon first convening notice of an extraordinary
  meeting, is one third of the voting Shares, and one fourth upon
  second convening notice or in the case of postponement of the
  second meeting. The resolutions of the extraordinary general
  meeting shall be carried out by a two third majority vote of
  the shareholders present or represented.

When
  any general meeting has not been able to transact business validly
  due to a lack of quorum, the second meeting or, as the case
  may be, the postponed second meeting, is convened in the same
  way as the first meeting at least six days prior to such second
  meeting. Notice and convening letters relating to such second
  meeting reproduce the date and agenda of the first meeting.
  The meetings are held at the registered office or at any other
  place mentioned in the convening notice.

At
  least 30 days prior to the date set for any general meeting
  of shareholders, a preliminary notice must be sent to theCommission
  des Opérations de Bourse(stock
  market operations commission) (the COB),
  the administrative agency responsible for overseeing the French
  securities markets, and published in France in theBulletin
  des Annonces Légales Obligatoires(bulletin
  of obligatory legal announcements) (the BALO).
  This preliminary notice must contain the agenda of the meeting
  and a draft of the resolutions to be considered. Within 10 days
  of such preliminary notice, one or several shareholders holding
  a specified percentage of Shares (determined on the basis of
  a formula relating to capitalization) or a duly qualified association
  of shareholders holding a specified percentage of voting rights
  may propose additional resolutions to be voted on at the meeting.
  At least 15 days prior to the date set for a general meeting
  on first call, and at least six days before any second call,
  a notice must be sent by mail to all holders of registered Shares
  who have held such Shares for more than one month prior to the
  publication of the below-mentioned notice. Notice of the meeting
  shall also be given in a journal authorized to publish legal
  announcements in the administrative region (département)
  in which LVMH is registered, as well as in theBALO,
  with prior notice to theCOB. The notice
  must state the type, agenda, place, date and time of the meeting.
  No action may be taken at a meeting on any matter not listed
  on the agenda for that meeting, subject to exceptions relating
  to the revocation of Directors and to certain miscellaneous
  matters.

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The
  right to take part in shareholders meetings is subject
  either to the registration of the shareholder in a registered
  account or to the deposit, at the places mentioned in the convening
  notice, of the bearer Shares or of a certificate delivered by
  the bank, the credit establishment or the stock broker with
  whom those Shares are deposited or of a certificate of the authorized
  intermediary, certifying the inalienability of the Shares until
  the date of the meeting, at least five days prior to the meeting.
  A shareholder can always validly be represented at a meeting
  of shareholders by his spouse or by another shareholder or if
  such shareholder is not a French resident, by the registered
  intermediary holding the Shares for such shareholders
  account.

Under
  French company law, shares of a company held by entities controlled
  directly or indirectly by that company are not entitled to voting
  rights, are not counted for quorum or majority purposes. Such
  shares are entitled to receive dividends.

Limitations on securities ownership

LVMHsstatutsdo not place any limitations on the right of any person to own
  securities of LVMH. For a discussion of certain French law requirements
  associated with Share ownership, see Item 10 - Additional
  Information - Exchange Controls and Other Limitations Effecting
  Security Holders.

Provisions delaying, deferring
  or preventing a change of control

There
  are no provisions in LVMHsstatutsthat would have the effect of delaying, deferring or preventing
  a change in control of LVMH and that would operate only with
  respect to a merger, acquisition or corporate restructuring
  involving LVMH or any of its subsidiaries.

Disclosure of Share ownership

French
  law provides that any individual or entity, acting alone or
  in concert with others, that acquires, directly or indirectly,
  more than 5%, 10%, 20%, 331/3%, 50% or
  662/3% of the Shares and/or voting rights
  attached to Shares, or whose holdings fall below any of these
  thresholds, must notify LVMH of the number of Shares and voting
  rights as well as the number of securities giving rights to
  Shares and the number of voting rights attached to such securities
  the person or entity holds within 15 calendar days of the date
  the threshold has been crossed. The individual or entity must
  also notify the Conseil des Marchés Financiers
  (financial markets council) (the CMF) within
  five Paris Bourse trading days of the date on which the threshold
  is crossed. In the event of failure to comply with this notification
  requirement, the Shares in excess of the relevant threshold
  will be deprived of voting rights until the expiration of a
  period of two years from the date on which the owner of the
  Shares has properly complied with the notification requirement.
  In addition, any shareholder who fails to comply with the above
  requirements may have all or part of his voting rights suspended
  for up to five years by the Commercial Court at the request
  of the Chairman of the Board of Directors, any shareholder or
  the COB, and may be subject to other penalties.

In
  addition to the requirements of French law, LVMHsstatutsrequire that any individual or legal entity who becomes the
  owner of a fraction of capital representing at least one per
  cent of LVMHs capital shall notify LVMH of the total number
  of Shares it holds. Such notice should be given within fifteen
  days from the date at which this percentage is reached. The
  same obligation applies whenever the portion of capital held
  increases by at least one per cent. However, this obligation
  ceases to be applicable when the portion of share capital held
  is equal to or greater than 60% of the share capital. In case
  of non-compliance with this obligation and upon the request
  of one or several shareholders holding at least 5% of the capital
  and recorded in the minutes of the general meeting, the Shares
  in excess of the percentage to be declared shall be deprived
  of their right to vote at any meeting held until the expiration
  of a period of three months as from the date at which proper
  notification pursuant to this paragraph is eventually made.

In
  order to permit shareholders to give the notice required by
  law or by LVMHsstatuts,
  LVMH is obligated to publish information disclosing the total
  number of votes available as of its annual ordinary general
  meeting in theBALOwithin 15 calendar days of the general meeting and to provide
  theCMFwith
  a written notice. In addition, if between two annual ordinary
  general meetings, the number of available votes changes by at
  least 5% by comparison to the last number declared, LVMH is
  required to publish the number of votes then available in theBALO,
  within 15 calendar days of the change, and to provide theCMFwith
  a written notice.

Under
  the regulations of the CMF, and subject to limited exemptions,
  anyone acquiring 331/3%
  or more of the share capital or voting rights of a French listed
  company must initiate a public tender offer for the balance
  of the

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share capital (including, for these
  purposes, all securities convertible into or exchangeable for
  equity securities) of the company.

Provisions governing changes
  in capital

The
  capital of LVMH may be increased only by a resolution passed
  by a two-thirds majority of shareholders present or represented
  at an extraordinary general meeting of the shareholders. However,
  when the increase of the capital is completed by way of capitalization
  of reserves, profits or issue premiums, the general meeting
  shall vote at the quorum and majority conditions of the ordinary
  general meetings of shareholders. The capital may, by resolution
  of the extraordinary general meeting of the shareholders, be
  amortized by means of equal repayment for each Share by use
  of profits or reserves other than the statutory reserve, without
  such amortization causing the reduction of the capital. The
  capital may also be reduced by resolution of the extraordinary
  general meeting of shareholders either by reducing the nominal
  value or the number of Shares.

MATERIAL CONTRACTS

In
  October 2002, LVMH and Diageo plc and Guinness France Holdings
  S.A. (together Diageo) executed a partners agreement
  (the Partners Agreement) regulating their relationship
  with respect to the management of Moët HennessySNC and Moët Hennessy
  International S.A. (together, Moët Hennessy),
  in which LVMH and Diageo hold respectively a 66% and 34% interest,
  and various supervisory and executive boards in which both LVMH
  and Diageo participate. Under the Partners Agreement, Diageo
  holds a put option, exercisable upon six months notice, which
  would require LVMH to purchase all of Diageos interest
  in Moët Hennessy, whether held directly or through subsidiaries,
  at 80% of fair market value, and, in the case of certain unresolved
  disputes between LVMH and Diageo, at 100% of fair market value.
  The Partners Agreement grants the parties put or call options
  which may be exercised in the event that a material competitor
  acquires control of either party. In the event of such a change
  of control with respect to LVMH, Diageo can require LVMH to
  purchase from Diageo its Moët Hennessy shares at a price
  between 100% and 115% of their fair market value; in the event
  of a change of control involving Diageo, LVMH can require Diageo
  to sell to LVMH its Moët Hennessy shares at a price between
  85% and 100% of fair market value. The value of Diageos
  interest in Moët Hennessy is discussed in Note 30.1 to
  the Consolidated Financial Statements (See Item 17  Financial
  Statements).

LVMH
  has entered into employment agreements with Mr. Antonio Belloni,
  Mr. Pierre Godé and Mr. Nicolas Bazire which are each
  attached hereto as exhibits. The agreement with Mr. Belloni
  provides for benefits upon termination of employment and is
  described in Item 6 - Directors, Senior Management and
  Employees  Compensation.

EXCHANGE CONTROLS
  AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

Ownership of Shares by Non-French
  Persons

Under
  current French law and LVMHsstatuts,
  Shares may be owned and voted by, and transferred to, nonresident
  or foreign shareholders without limitation. Pursuant to a French
  regulation dated February 14, 1996, anautorisation
  préalableor prior
  authorization is no longer required for the acquisition of a
  controlling interest in LVMH by any person who is not a resident
  in the European Union (EU). However, both EU and
  non-EU residents (as well as companies in France under direct
  or indirect foreign control or branches in France of foreign
  companies) must file adéclaration
  administrativeor administrative
  notice with French authorities in connection with the acquisition
  of more than 33.33% of the companys share capital or voting
  rights.

Exchange Controls

Under
  current French exchange control regulations, there are no limitations
  on the amount of cash payments that may be remitted by LVMH
  to residents of the United States. Laws and regulations concerning
  foreign exchange controls do require, however, that all payments
  or transfers of funds made by a French resident to a nonresident
  be handled by an authorized intermediary bank. Consequently,
  the payment of all dividends to foreign shareholders must be
  effected through an authorized intermediary bank. All registered
  banks and credit establishments in France are authorized intermediaries.

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TAXATION

General

The
  following generally summarizes the material United States federal
  and French tax consequences to holders of Shares or ADSs who
  are citizens or residents of the United States for United States
  federal income tax purposes (United States Holders).
  Because it is a general summary, United States Holders are advised
  to consult their own tax advisors with respect to the United
  States federal, state, local and foreign tax consequences, as
  well as the French tax consequences, of the ownership of ADSs
  or Shares applicable in their particular tax situations, including
  in particular the United States Holders status under Article
  30 (Limitation on Benefits) of the Treaty (as defined below).
  In particular, the summary does not deal with United States
  Holders that do not hold Shares or ADSs as capital assets, and
  does not address the tax treatment of holders that are subject
  to special rules, such as certain financial institutions, insurance
  companies, dealers and traders in securities or currencies,
  persons that elect mark-to-market treatment, partnerships or
  other entities classified as partnerships for U.S. federal income
  tax purposes, persons liable for the alternative minimum tax,
  tax-exempt organizations, persons holding Shares or ADSs as
  part of a hedge, straddle or conversion transaction, persons
  that own, directly or indirectly, 10% or more of any class of
  LVMHs stock and persons whose functional currency is not
  the U.S. dollar.

The
  statements of United States and French tax laws set out below
  are based (i) on the laws in force as of the date of filing
  of this Annual Report on Form 20-F and are subject to any changes
  in United States or French law, or in the double taxation conventions
  between the United States and France, occurring after such date
  and (ii) in part on representations of the Depositary, The Bank
  of New York, and assume that each obligation in the Deposit
  Agreement among LVMH, the Depositary and the holders from time
  to time of ADRs in respect of ADSs and any related agreement
  was performed in accordance with its terms. The statements of
  French tax laws are also based on special regulations released
  in 1994 by the French tax authorities (the Simplified
  Procedures) and the convention between the United States
  of America and the French Republic for the Avoidance of Double
  Taxation and the Prevention of Fiscal Evasion with Respect to
  Taxes on Income and Capital of August 31, 1994 (the Treaty),
  that entered into force on December 30, 1995.

For
  purposes of the Treaty and the United States Internal Revenue
  Code of 1986, as amended (the Code), United States
  Holders of ADSs are treated as the owners of the underlying
  Shares represented by such ADSs. Accordingly, and except as
  noted below, the French and United States federal income tax
  consequences discussed below apply equally to United States
  Holders of Shares and no gain or loss is recognized upon the
  exchange of ADSs for the underlying Shares represented by such
  ADSs.

The
  U.S. Treasury has expressed concerns that parties to whom ADSs
  are released may be taking actions that are inconsistent with
  the claiming of foreign tax credits for United States holders
  of ADSs. Accordingly, the analysis of the creditability of French
  taxes described below could be affected by future actions that
  may be taken by the U.S. Treasury.

Taxation of Dividends

In
  general, under French law, a resident of France is entitled
  to anavoir fiscalor tax credit in respect of a dividend received from a French
  corporation, such as LVMH, equal to 50% or 15% for 2002, and
  10% for 2003, of the amount of the dividend depending on the
  type of shareholder. Theavoir
  fiscalis allowed to shareholders who are not residents
  of France only pursuant to a treaty or similar agreement between
  France and such non-residents country of residence, and
  dividends paid to non-residents of France are subject to French
  withholding tax at a rate of 25% (or a lower rate pursuant to
  a treaty).

Under
  the Treaty, the rate of French withholding tax is reduced to
  15% in the case of dividends paid to an Eligible United States
  Holder or to an Eligible Tax-exempt Entity. Eligible United
  States Holders are also entitled to a payment equal to theavoir
  fiscal, less a 15% withholding
  tax and Eligible Tax-exempt Entities are entitled to a partial
  payment of theavoir fiscalequal to 30/85 of theavoir
  fiscalnet of a withholding
  tax of 15%. If theSimplified
  Procedures apply, the reduced rate of withholding will apply
  upon payment of a dividend to an Eligible United States Holder
  or Eligible Tax-exempt Entity, and a separate payment (or, in
  the case of Tax-exempt Entities, partial payment) of theavoir
  fiscal(net of withholding)
  will be made not sooner than January 15th of the year following
  the year in which the dividend is paid. Eligible United States
  Holders should consult their own bank or brokers regarding the
  availability of the Simplified Procedures. Eligible United States
  Holders that are regulated

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investment companies or Eligible
  Tax-exempt Entities will have to supply additional documentation,
  which may be difficult to obtain, evidencing their entitlement
  to the Simplified Procedures. In addition, the Simplified Procedures
  are not available to Eligible United States Holders holding
  ADSs or Shares through a bank or a broker which does not comply
  with all applicable requirements.

An
  Eligible United States Holder is a United States Holder whose
  ownership of ADSs or Shares is not effectively connected with
  a permanent establishment or fixed base in France, who is entitled
  under the limitations on benefits provisions contained in Article
  30 of the Treaty, to the benefits of the Treaty, who is subject
  to United States income tax in respect of dividends received
  from LVMH andavoir fiscalreceived from the French Treasury and who is (i) an individual
  or other non-corporate holder that is a resident of the United
  States for purposes of the Treaty, (ii) a United States corporation,
  other than a regulated investment company, which owns directly
  or indirectly less than 10% of the capital of LVMH, (iii) a
  United States corporation which is a regulated investment company
  if it owns, directly or indirectly less than 10% of the capital
  of LVMH and less than 20% of its shares are beneficially owned
  by persons who are neither citizens nor residents of the United
  States, or (iv) a partnership or trust that is treated as a
  resident of the United States for purposes of the Treaty, but
  only to the extent that its partners, beneficiaries or grantors
  would qualify under clause (i) or (ii) above.

Under
  the Treaty, an Eligible Tax-exempt Entity is a (i) tax-exempt
  entity established in, and sponsored or established by a resident
  of, the United States, the exclusive purpose of which is to
  provide retirement or employee benefits and which does not own,
  directly or indirectly, 10% or more of the capital of LVMH,
  (ii) a tax-exempt entity organized in the United States, the
  use of whose assets is limited under United States Federal or
  state laws, both currently and upon liquidation, to the accomplishment
  of the purposes that serve as the basis of its exemption from
  income taxation in the United States and which does not own,
  directly or indirectly, 10% or more of the capital of LVMH,
  or (iii) an individual who is a resident of the United States
  under the Treaty and who owns Shares or ADSs through an individual
  retirement account, a Keogh plan or any similar arrangement.

If
  the Simplified Procedures are not available with respect to
  any dividend payment, French tax will be withheld at the non-treaty
  rate of 25% and Eligible United States Holders and Eligible
  Tax-exempt Entities will have to claim a refund of the excess
  withholding tax and payment (or in the case of Eligible Tax-exempt
  Entities, partial payment) of theavoir
  fiscal(collectively, the
  Treaty Payment) from the French tax authorities
  by filing a French Treasury Form RF-1 A-EU No. 5052 entitled
  Application for Refund. The form, together with
  instructions may be available from the United States Internal
  Revenue Service and must be filed with the French tax authorities
  by December 31 of the year following the calendar year in which
  the related dividend is paid.

The
  Treaty Payment is generally expected to be made to certain classes
  of Eligible United States Holders within 12 months of filing
  the French Treasury form, but not before the close of the calendar
  year in which the related dividend is paid. For United States
  federal income tax purposes, a United States Holder may be required
  to recognize foreign currency gain or loss, which will generally
  be United States source ordinary income or loss, in respect
  of the Treaty Payment.

For
  United States federal income tax purposes, the gross amount
  of a distribution and of anyavoir
  fiscalpaid to a United
  States Holder, including any French withholding tax thereon,
  will be included in gross income as dividend income to the extent
  paid or deemed paid out of LVMHs current or accumulated
  earnings and profits as calculated for United States federal
  income tax purposes. Under recently enacted legislation, dividends
  received by noncorporate U.S. Holders on Shares or ADSs may
  be subject to U.S. federal income tax at lower rates than other
  types of ordinary income if certain conditions are met. U.S.
  Holders should consult their own tax advisors regarding the
  implications of this new legislation in their particular circumstances.
  No dividends received deduction will be allowed with respect
  to dividends paid by LVMH. Such dividends will generally constitute
  foreign source passive income for foreign tax credit
  purposes. The amount of any cash distribution paid in euros,
  including the amount of any French taxes withheld therefrom,
  will be equal to the United States dollar value of the euros
  on the date of receipt of the distribution, regardless of whether
  the payment is in fact converted into United States dollars.
  Any gain or loss recognized by a United States Holder on a sale
  or other disposition of such euros will generally be United
  States source ordinary income or loss.

French
  withholding tax imposed at the treaty rate of 15% on dividends
  paid by LVMH and on related payments ofavoir
  fiscalis a foreign income tax, and, subject to certain
  conditions and limitations, may be taken as a credit against
  such United States Holders United States federal income
  tax liability. The additional 10% French tax which may be withheld
  by LVMH in accordance with French law, that may be refunded
  to an Eligible United States

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Holder as described above, will
  not be eligible for such credit. You should consult your own
  tax advisers to determine whether you are subject to any special
  rules that limit your ability to make effective use of foreign
  tax credits.

As
  a consequence of the settlement procedures provided by French
  stock exchange regulations, in the case of the sale of Shares
  in a trade executed on the monthly settlement market during
  the month of a dividend payment date with respect to the Shares,
  the seller of the Shares rather than the purchaser generally
  will be entitled to theavoir
  fiscalwith respect to
  the dividends paid on such Shares on such dividend payment date.
  See Item 9  The Offer and Listing  Markets
  for a summary of certain information relating to trading of
  the Shares. U.S. Holders are advised to consult their tax advisor
  regarding the creditability of any withholding tax imposed on
  such a dividend oravoir
  fiscal.

Sale or Other Disposition of
  ADSs or Shares

In
  general, a United States Holder who is a resident of the United
  States for purposes of the Treaty and who is entitled to benefits
  of the Treaty under the limitations on benefits provision contained
  therein will not be subject to French tax on any capital gain
  derived from the sale or exchange of ADSs or Shares, except
  in certain instances where the United States Holder maintains
  a permanent establishment or fixed base in France. Subject to
  the discussion under Passive Foreign Investment Company
  Considerations, United States Holders will generally be
  subject to United States federal income tax on any gain derived
  from the sale or exchange of the ADSs or Shares. Any gain or
  loss will generally be capital gain or loss and will be long-term
  capital gain or loss if a United States Holder held ADSs or
  Shares for more than one year. The amount of your gain or loss
  will be equal to the difference between your tax basis in the
  ADSs or Shares disposed of and the amount realized on the disposition.
  Such gain or loss will generally be United States source gain
  or loss for foreign tax credit purposes.

Passive Foreign Investment Company
  Considerations

LVMH
  believes that it will not be considered a passive foreign
  investment company (PFIC) for United States
  federal income tax purposes for the year 2002. However, since
  PFIC status depends upon the composition of a companys
  income and assets and the market value of its assets (including,
  among others, less than 25 percent owned equity investments)
  from time to time, there can be no assurance that LVMH will
  not be considered a PFIC for any taxable year. If LVMH were
  treated as a PFIC for any taxable year during which a United
  States Holder held an ADS or Share, certain adverse consequences
  could apply to the United States Holder.

If
  LVMH is treated as a PFIC for any taxable year, gain recognized
  by such United States Holder on a sale or other disposition
  of the ADS or Share would be allocated ratably over the United
  States Holders holding period for the ADS or Share. The
  amounts allocated to the taxable year of the sale or other exchange
  and to any year before LVMH became a PFIC would be taxed as
  ordinary income. The amount allocated to each other taxable
  year would be subject to tax at the highest rate in effect for
  individuals or corporations, as appropriate, and an interest
  charge would be imposed on the amount allocated to such taxable
  year. Further, any distribution in respect of ADSs or Shares
  in excess of 125 percent of the average of the annual distributions
  on ADSs or Shares received by the United States Holder during
  the preceding three years or the United States Holders
  holding period, whichever is shorter, would be subject to taxation
  as described above. Certain elections may be available (including
  a mark to market election) to United States persons that may
  mitigate the adverse consequences resulting from PFIC status.

French Estate and Gift Taxes

A
  transfer of ADSs by gift or by reason of the death of a United
  States Holder that would otherwise be subject to French gift
  or inheritance tax, respectively, is not subject to such French
  tax by reason of the estates and gift tax convention in force
  between the United States and France, unless the donor or the
  transferor is domiciled in France at the time of making the
  gift, or of his or her death, or the ADSs were used in, or held
  for use in, the conduct of a business through a permanent establishment
  in France.

French Wealth Tax

The
  French wealth tax does not apply to ADSs owned by a United States
  Holder resident of the United States for purposes of the Treaty
  and who is entitled to benefits under the limitations on benefits
  provision contained therein, provided that the United States
  Holder does not maintain a permanent establishment or fixed
  base in France.

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DIVIDENDS AND
  PAYING AGENTS

Not
  applicable.

STATEMENT BY EXPERTS

Not
  applicable.

DOCUMENTS ON DISPLAY

LVMH
  files annual and special reports and other information with
  the SEC. You may read and copy any document that LVMH files
  at the Public Reference Room of the SEC at 450 Fifth Street,
  NW, Washington, D.C. 20549, and at the SECs Public Reference
  Rooms in New York, New York and Chicago, Illinois. You may obtain
  information on the operation of the Public Reference Room by
  calling the SEC at 1-800-SEC-0330.

You
  may request a copy of these filings by writing or telephoning
  the offices of LVMH, 22, avenue Montaigne, 75008 Paris, attention:
  Investor Relations Department. LVMHs telephone number
  is 011-33-1-44-13-22-22.

SUBSIDIARY INFORMATION

Not
  applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE
  DISCLOSURES ABOUT MARKET RISK

Exposure to Foreign Exchange
  Risks

A
  substantial portion of LVMHs sales are in currencies other
  than the euro, including, in particular, the United States dollar
  and the Japanese yen. However, most of its production costs
  are incurred in euros. Therefore, exchange rate fluctuations
  between the euro and the principal currencies in which LVMHs
  sales are denominated can significantly change LVMHs sales
  figures and earnings reported in euros. Thus hampering LVMHs
  year to year performance comparisons.

LVMH
  actively manages its exposure to exchange rate risks in order
  to reduce its sensitivity to unfavorable currency fluctuations,
  implementing hedges in the form of forward sales or option products.
  Holding substantial assets in currencies (primarily the U.S.
  dollar and the Swiss franc), also generates an exchange rate
  risk related to the assets. This risk is managed by means of
  total or partial funding of the assets in question by borrowings
  in the same currency as the related asset.

As
  prescribed by LVMHs risk management policy, its hedging
  positions are gradually increased as and when the foreign exchange
  risks arise. As of December 31, 2002, the impact of a hypothetical
  uniform strengthening in 2003 of 10% in the value of the euro
  relative to the main currencies in which LVMH sales are denominated
  (which represent 90% of LVMHs foreign exchange exposure)
  would result in a decrease of LVMHs income from operations
  by approximately EUR 251 million. Taking into account hedges
  existing as of December 31, 2002 the net effect of such strengthening
  in 2003 would result in an increase of LVMHs income from
  operations by approximately EUR 54 million.

As
  of December 31, 2001, the impact of a hypothetical uniform strengthening
  in 2002 of 10% in the value of the euro relative to the main
  currencies in which LVMH sales are denominated (which represent
  95% of LVMHs foreign exchange exposure) would have resulted
  in a decrease of LVMHs income from operations by approximately
  EUR 237 million. Taking into account hedges existing as of December
  31, 2001 the net effect of such strengthening in 2002 would
  have resulted in a decrease of LVMHs income from operations
  by approximately EUR 10 million.

The
  table set forth below presents, for the periods indicated, the
  percentage of consolidated sales by LVMH in the currencies indicated:

97



---

Percentage of
  Consolidated Sales by Currency

|                     | Years
      ended December 31 |  
|-------------------- | ----------------------------- | -
|                     |                               |  
|                     | 2002                          |  
|                     |                               |  
|Euro                 | 32                            | %
|United States dollar | 32                            | %
|Japanese yen         | 16                            | %
|Hong Kong dollar     | 4                             | %
|Other                | 16                            | %
|                     |                               |  
|Total                | 100                           | %
|                     |                               |  

This
  sensitivity results from a calculation based on LVMHs
  exposure and existing hedging positions as of December 31, 2002,
  which reflects the changes in exchange rates, but not potential
  changes in sales levels or local currency prices due to exchange
  rate changes. It does not take into consideration any potential
  tax impact.

Exposure to Interest Rate Risks

LVMHs
  exposure to interest rate risks may be assessed through the
  amount of its consolidated net debt, which was approximately
  EUR 6.5 billion at December 31, 2002 and of which 51% was fixed
  rate debt or floating rate debt with a cap and approximately
  49% was floating rate debt (see Item 17  Financial
  Statements  Note 29 of the Notes to the Consolidated
  Financial Statements).

As
  LVMH debt is denominated in a variety of currencies, LVMH is
  exposed in varying degrees to fluctuations in interest rates
  in its principal currencies of indebtedness (the euro, U.S.
  dollar, Swiss franc and Japanese yen). This risk is managed
  through the use of interest rate swaps and purchase of caps
  (protections against rate hikes) designed to limit the negative
  impact of unfavorable interest rate fluctuations. Therefore,
  a hypothetical increase of 1% in average interest rates in 2002
  applied to LVMHs debt structure as of December 31, 2002
  (including all existing hedging operations), would result in
  a decrease of its annual net income by approximately EUR 30
  million.

A
  hypothetical increase of 1% in average interest rates in 2001
  applied to LVMHs debt structure as ofDecember
  31, 2001 (including all existing hedging operations), would
  have resulted in a decrease of its annual net income by approximately
  EUR 61 million.

All
  interest rate hedging instruments are linked to financial debt
  falling due either at the same time as, or after, said instruments.
  The type of instruments in force as of December 31, 2002 and
  the amount of the underlying assets are as follows:

|                    |  |                          |  | Maturity          | 
|------------------- |  | ------------------------ |  | ----------------- | 
|                    |  |                          |  |                   | 
|                    |  |                          |  | From
      1 to 5 | 
|                    |  | 1
      year or less     |  | years             | 
|                    |  |                          |  |                   | 
|                    |  | (in
      EUR thousands) | 
|Fixed rate swaps    |  |                         |  | 564,000           | 
|Floating rate swaps |  | 2,779,000                |  | 4,042,000         | 
|Caps bought         |  | 2,851,000                |  | 2,166,000         | 
|Floors sold         |  |                         |  | 650,000           | 

Exposure to Equity Market Risks

LVMHs
  exposure to equity market risks is primarily related to LVMH
  treasury Shares and to its interest in Bouygues, a risk covered
  in large part by provisions. LVMH sometimes uses hedging instruments
  to limit its exposure.

Exposure to Liquidity Risks

Aside
  from local liquidity risks, which are generally not material,
  LVMHs exposure to liquidity risk can be assessed through
  the amount of its net short-term borrowings, (EUR 1.7 billion),
  or through the outstanding amount of
  its commercial paper program (EUR 1.4 billion). In consideration
  of any such future payments falling due, LVMH has undrawn confirmed
  lines of credit totaling EUR 3.7 billion.

98



---

LVMHs
  liquidity is based on the amount of its long-term financing,
  the diverse nature of its investment base (regarding bonds and
  short-term paper), and the quality of its banking relationships,
  as may or may not be evidenced by confirmed lines of credit.

Exposure to Other Market Risks

LVMH
  has no material sensitivity to changes in commodity prices.

Management of Foreign Exchange,
  Interest Rate and Equity Market Risks

LVMH
  employs a centralized, non-speculative interest rate and currency
  risk management strategy designed to limit the negative impact
  of foreign currency or interest rate fluctuations on its business
  or investments.

LVMHs
  policy relies specifically on the following tools to:

| |  | hedging
      through forward contracts or options of:                                                                                                                   
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                         
| |   |                                                                                                                                                                         
| |   |                                                                                                                                                                         
| |  | borrowing
      in the currency of the assets or of the future cash flows
      from the investment,                                                                     
| |  | implementing
      swap contracts and interest rate caps or floors to balance
      LVMHs debt structure (distribution between fixed rate
      and floating rate debt).

(See
  Item 17  Financial Statements  Note
  29 of the Notes to the Consolidated Financial Statements).

LVMH
  has established very strict management rules and procedures
  to assess, manage and monitor these market risks. These activities
  are organized based on a strict separation of the functions
  of risk assessment, hedging activities (front-office), administrative
  management (back-office) and financial control. This organization
  is backed by an integrated information system which allows real-time
  monitoring of hedging activities. LVMHs hedging policy
  is submitted to the Performance Audit Committee, and individual
  hedging decisions are made on the basis of a clearly defined
  process which includes regular presentations to the Executive
  Committee and detailed documentation. LVMH counterparties are
  selected on the basis of a minimum rating level and according
  to a risk diversification approach.

ITEM 12. DESCRIPTION OF SECURITIES
  OTHER THAN EQUITY SECURITIES

Not
  applicable.

99



---

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES
  AND DELINQUENCIES

None.

ITEM 14. MATERIAL MODIFICATIONS
  TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

ITEM 15. CONTROLS AND PROCEDURES

The
  Chief Executive Officer, Chief Financial Officer and Operations
  Executive Vice-President of LVMH have evaluated the effectiveness
  of LVMHs disclosure controls and procedures
  (as defined in Rules 13a-14(c) and 15d-14(c) of the Securities
  Exchange Act of 1934, as amended) as of a date within 90 days
  prior to the filing of this Annual Report and concluded that,
  as of the date of their evaluation, LVMHs disclosure controls
  and procedures were effective and designed to ensure that material
  information relating to LVMH, is made known to them by others
  within these entities, particularly during the period in which
  this Annual Report has been prepared.

There
  have been no significant changes in LVMHs internal controls
  or in other factors that could significantly affect these controls
  subsequent to the date of their evaluation, including any corrective
  actions with regard to significant deficiencies and material
  weaknesses.

ITEM 16. [RESERVED]

Not
  applicable.

100



---

PART III

|  |   |                                                                                                         |    
|- | - | ------------------------------------------------------------------------------------------------------- | ---
|  |   | See
      pages F-1 through F-66 and S-1 for LVMHs Financial
      Statements.                         |    
|  |   |                                                                                                         |    
|  |   | The
      following financial statements and schedules are filed as
      part of this Form 20-F:       |    
|  |   |                                                                                                         |    
|1 | . | Report of Independent
      Auditors                                                                    | F-1
|2 | . | Consolidated Statements
      of Income for the years ended December 31, 2002, 2001 and
      2000      | F-2
|3 | . | Consolidated Balance
      Sheet as of December 31, 2002, 2001 and 2000                                 | F-3
|4 | . | Consolidated Statement
      of Changes in Stockholders Equity as of December 31,
      2002, 2001 and |    
|  |   | 2000                                                                                                    | F-5
|5 | . | Consolidated Statement
      of Cash Flows for the years ended December 31, 2002, 2001
      and 2000   | F-6
|6 | . | Notes to the Consolidated
      Financial Statements                                                    | F-7
|7 | . | Financial Statements
      Schedule                                                                     | S-1
|  |   | Schedule II:                                                                                            |    
|  |   | Valuation and Qualifying
      Accounts and Reserves for the years ended December 31, 2002,
      2001  |    
|  |   | and 2000                                                                                                |    

Other
  schedules are omitted because they are not applicable or because
  the information required is included in the financial statements
  or notes thereto.

ITEM 18. FINANCIAL STATEMENTS

> Not applicable.

ITEM 19. EXHIBITS

> Exhibits:

| | 1.     | Statutsof
      LVMH as amended to date.                                                                  
| | ------ | ----------------------------------------------------------------------------------------------------------
| |        |                                                                                                           
| | 4(a).  | Partners Agreement
      among LVMH, Diageo plc, Guinness France Holdings S.A. and
      LVMH Fashion     
| |        | Group S.A. dated
      October 1, 2002.                                                                   
| |        |                                                                                                           
| | 4(c)1. | Employment agreement
      between LVMH, S.A. and Mr. Antonio Belloni dated May 14,
      2001.           
| |        |                                                                                                           
| | 4(c)2. | Employment agreement
      between Moët Hennessy and Mr. Nicolas Bazire dated
      June 30, 2000 (English
| |        | translation for
      information purposes only).                                                         
| |        |                                                                                                           
| | 4(c)3. | Employment agreement
      between Moët Hennessy and Mr. Pierre Godé dated
      June 1, 1992 (English    
| |        | translation for
      information purposes only).                                                         
| |        |                                                                                                           
| | 8.     | List of Subsidiaries.                                                                                     

Upon
  request of the Commission, LVMH will furnish a copy of the instruments
  with respect to the long-term debt securities of LVMH set forth
  in Note 16 to LVMHs Consolidated Financial Statements.

101



---

SIGNATURES

Pursuant to the requirements of
  Section 12 of the Securities Exchange Act of 1934, the Registrant
  certifies that it meets all of the requirements for filing on
  Form 20-F and has duly caused this annual report for 2002 to
  be signed on its behalf by the undersigned, thereunto duly authorized.

LVMH MOËT
        HENNESSY LOUIS VUITTON(Registrant)By
      /s/ Patrick HouëlPatrick HouëlChief Financial
        Officer


June 30, 2003



---

CERTIFICATION
  OF CHIEF EXECUTIVE OFFICER

I, Bernard Arnault, certify that:

1. I have reviewed this annual report
  on Form 20-F of LVMH Moët Hennessy Louis Vuitton;

2. Based on my knowledge, this annual
  report does not contain any untrue statement of a material fact
  or omit to state a material fact necessary to make the statements
  made, in light of the circumstances under which such statements
  were made, not misleading with respect to the period covered
  by this annual report;

3. Based on my knowledge, the financial
  statements, and other financial information included in this
  annual report, fairly present in all material respects the financial
  condition, results of operations and cash flows of the registrant
  as of, and for, the periods presented in this annual report;

4. The registrant's other certifying
  officers and I are responsible for establishing and maintaining
  disclosure controls and procedures (as defined in Exchange Act
  Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls
  and procedures to ensure that material information relating
  to the registrant, including its consolidated subsidiaries,
  is made known to us by others within those entities, particularly
  during the period in which this annual report is being prepared;

b) evaluated the effectiveness of
  the registrant's disclosure controls and procedures as of a
  date within 90 days prior to the filing date of this annual
  report (the "Evaluation Date"); and

c) presented in this annual report
  our conclusions about the effectiveness of the disclosure controls
  and procedures based on our evaluation as of the Evaluation
  Date;

5. The registrant's other certifying
  officers and I have disclosed, based on our most recent evaluation,
  to the registrant's auditors and the audit committee of registrant's
  board of directors (or persons performing the equivalent function):

a) all significant deficiencies
  in the design or operation of internal controls which could
  adversely affect the registrant's ability to record, process,
  summarize and report financial data and have identified for
  the registrant's auditors any material weaknesses in internal
  controls; and

b) any fraud, whether or not material,
  that involves management or other employees who have a significant
  role in the registrant's internal controls; and

6. The registrant's other certifying
  officers and I have indicated in this annual report whether
  or not there were significant changes in internal controls or
  in other factors that could significantly affect internal controls
  subsequent to the date of our most recent evaluation, including
  any corrective actions with regard to significant deficiencies
  and material weaknesses.

Date: June 24, 2003

/s/ Bernard ArnaultBernard ArnaultChief Executive
        Officer


---

CERTIFICATION
  OF CHIEF FINANCIAL OFFICER

I, Patrick Houël, certify that:

1. I have reviewed this annual report
  on Form 20-F of LVMH Moët Hennessy Louis Vuitton;

2. Based on my knowledge, this annual
  report does not contain any untrue statement of a material fact
  or omit to state a material fact necessary to make the statements
  made, in light of the circumstances under which such statements
  were made, not misleading with respect to the period covered
  by this annual report;

3. Based on my knowledge, the financial
  statements, and other financial information included in this
  annual report, fairly present in all material respects the financial
  condition, results of operations and cash flows of the registrant
  as of, and for, the periods presented in this annual report;

4. The registrant's other certifying
  officers and I are responsible for establishing and maintaining
  disclosure controls and procedures (as defined in Exchange Act
  Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls
  and procedures to ensure that material information relating
  to the registrant, including its consolidated subsidiaries,
  is made known to us by others within those entities, particularly
  during the period in which this annual report is being prepared;

b) evaluated the effectiveness of
  the registrant's disclosure controls and procedures as of a
  date within 90 days prior to the filing date of this annual
  report (the "Evaluation Date"); and

c) presented in this annual report
  our conclusions about the effectiveness of the disclosure controls
  and procedures based on our evaluation as of the Evaluation
  Date;

5. The registrant's other certifying
  officers and I have disclosed, based on our most recent evaluation,
  to the registrant's auditors and the audit committee of registrant's
  board of directors (or persons performing the equivalent function):

a) all significant deficiencies
  in the design or operation of internal controls which could
  adversely affect the registrant's ability to record, process,
  summarize and report financial data and have identified for
  the registrant's auditors any material weaknesses in internal
  controls; and

b) any fraud, whether or not material,
  that involves management or other employees who have a significant
  role in the registrant's internal controls; and

6. The registrant's other certifying
  officers and I have indicated in this annual report whether
  or not there were significant changes in internal controls or
  in other factors that could significantly affect internal controls
  subsequent to the date of our most recent evaluation, including
  any corrective actions with regard to significant deficiencies
  and material weaknesses.

Date: June 24, 2003

/s/ Patrick HouëlPatrick HouëlChief Financial Officer


---

CERTIFICATION
  OF OPERATIONS EXECUTIVE VICE-PRESIDENT

I, Bernard Rolley, certify that:

1. I have reviewed this annual report
  on Form 20-F of LVMH Moët Hennessy Louis Vuitton;

2. Based on my knowledge, this annual
  report does not contain any untrue statement of a material fact
  or omit to state a material fact necessary to make the statements
  made, in light of the circumstances under which such statements
  were made, not misleading with respect to the period covered
  by this annual report;

3. Based on my knowledge, the financial
  statements, and other financial information included in this
  annual report, fairly present in all material respects the financial
  condition, results of operations and cash flows of the registrant
  as of, and for, the periods presented in this annual report;

4. The registrant's other certifying
  officers and I are responsible for establishing and maintaining
  disclosure controls and procedures (as defined in Exchange Act
  Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls
  and procedures to ensure that material information relating
  to the registrant, including its consolidated subsidiaries,
  is made known to us by others within those entities, particularly
  during the period in which this annual report is being prepared;

b) evaluated the effectiveness of
  the registrant's disclosure controls and procedures as of a
  date within 90 days prior to the filing date of this annual
  report (the "Evaluation Date"); and

c) presented in this annual report
  our conclusions about the effectiveness of the disclosure controls
  and procedures based on our evaluation as of the Evaluation
  Date;

5. The registrant's other certifying
  officers and I have disclosed, based on our most recent evaluation,
  to the registrant's auditors and the audit committee of registrant's
  board of directors (or persons performing the equivalent function):

a) all significant deficiencies
  in the design or operation of internal controls which could
  adversely affect the registrant's ability to record, process,
  summarize and report financial data and have identified for
  the registrant's auditors any material weaknesses in internal
  controls; and

b) any fraud, whether or not material,
  that involves management or other employees who have a significant
  role in the registrant's internal controls; and

6. The registrant's other certifying
  officers and I have indicated in this annual report whether
  or not there were significant changes in internal controls or
  in other factors that could significantly affect internal controls
  subsequent to the date of our most recent evaluation, including
  any corrective actions with regard to significant deficiencies
  and material weaknesses.

Date: June 24, 2003

/s/ Bernard RolleyBernard RolleyOperations Executive Vice-President


---

REPORT
  OF INDEPENDENT AUDITORS

To the Board
  of Directors and Shareholders 
  LVMH Moët Hennessy Louis Vuitton

We have audited
  the accompanying consolidated balance sheets of LVMH Moët
  Hennessy Louis Vuitton as of December 31, 2002, 2001 and 2000
  and the related consolidated statements of income, changes in
  stockholders equity, and cash flows, for each of the three
  years in the period ended December 31, 2002. Our audits also
  included the financial statement schedule listed in the accompanying
  Index at Item 17. These financial statements and schedule are
  the responsibility of the Companys management. Our responsibility
  is to express an opinion on these financial statements and schedule
  based on our audits.

We conducted
  our audits in accordance with auditing standards generally accepted
  in France and in the United States. Those standards require
  that we plan and perform the audit to obtain reasonable assurance
  about whether the financial statements are free of material
  misstatement. An audit includes examining, on a test basis,
  evidence supporting the amounts and disclosures in the financial
  statements. An audit also includes assessing the accounting
  principles used and significant estimates made by management,
  as well as evaluating the overall financial statement presentation.
  We believe that our audits provide a reasonable basis for our
  opinion.

In our opinion,
  the Consolidated Financial Statements referred to above present
  fairly, in all material respects, the consolidated financial
  position of LVMH Moët Hennessy Louis Vuitton at December
  31, 2002, 2001 and 2000 and the consolidated results of its
  operations and its cash flows for each of the three years in
  the period ended December 31, 2002, in conformity with generally
  accepted accounting principles in France. Also, in our opinion,
  the related financial statement schedule, when considered in
  relation to the basic financial statements taken as a whole,
  presents fairly in all material respects the information set
  forth therein.

Accounting
  practices used by the Company in preparing the accompanying
  consolidated financial statements conform with generally accepted
  accounting principles in France, but do not conform in certain
  respects with accounting principles generally accepted in the
  United States of America. A description of these differences
  and a complete reconciliation of net income and stockholders
  equity to accounting principles generally accepted in the United
  States are set forth in Note 34 to the consolidated financial
  statements.

Paris, April
  10, 2003

ERNST &
  YOUNG AUDIT
/s/ Gabriel Galet
  Represented by Gabriel Galet

F-1

---

CONSOLIDATED
  STATEMENT OF INCOME FOR 2002

|                                                                               |       |             |   |             |   |             |  
|------------------------------------------------------------------------------ | ----- | ----------- | - | ----------- | - | ----------- | -
|(EUR
      millions except EPS, stated in EUR and number of shares)            | NOTES | 2002        |   | 2001        |   | 2000        |  
|                                                                               |       |             |   |             |   |             |  
|Net
      sales                                                                | 22    | 12,693      |   | 12,229      |   | 11,581      |  
|                                                                               |       |             |   |             |   |             |  
|Cost
      of sales                                                            |       | (4,563      | ) | (4,654      | ) | (4,221      | )
|                                                                               |       |             |   |             |   |             |  
|Gross
      margin                                                             |       | 8,130       |   | 7,575       |   | 7,360       |  
|Marketing
      and selling expenses                                           |       | (4,705      | ) | (4,568      | ) | (4,206      | )
|General
      and administrative expenses                                      |       | (1,417      | ) | (1,447      | ) | (1,195      | )
|                                                                               |       |             |   |             |   |             |  
|Income
      from operations                                                   | 22    | 2,008       |   | 1,560       |   | 1,959       |  
|                                                                               |       |             |   |             |   |             |  
|Financial
      expense - net                                                  | 24    | (294        | ) | (459        | ) | (421        | )
|Dividends
      from unconsolidated investments                                |       | 8           |   | 21          |   | 45          |  
|Other
      income or expenses - net                                           | 25    | (405        | ) | (455        | ) | 109         |  
|                                                                               |       |             |   |             |   |             |  
|Income
      before income taxes                                               |       | 1,317       |   | 667         |   | 1,692       |  
|                                                                               |       |             |   |             |   |             |  
|Income
      taxes                                                             | 26    | (350        | ) | (192        | ) | (633        | )
|Income
      (loss) from investments accounted for                             |       |             |   |             |   |             |  
|using
      the equity method                                                  | 9     | (18         | ) | (42         | ) | (34         | )
|                                                                               |       |             |   |             |   |             |  
|Net
      income before amortization of goodwill, minority interests
      and |       |             |   |             |   |             |  
|unusual
      items                                                            |       | 949         |   | 433         |   | 1,025       |  
|                                                                               |       |             |   |             |   |             |  
|Amortization
      of goodwill                                                 | 27    | (262        | ) | (168        | ) | (141        | )
|Minority
      interests                                                       | 19    | (131        | ) | (99         | ) | (179        | )
|Unusual
      items - net                                                      | 28    | -           |   | (156        | ) | 17          |  
|                                                                               |       |             |   |             |   |             |  
|Net
      income                                                               |       | 556         |   | 10          |   | 722         |  
|                                                                               |       |             |   |             |   |             |  
|Net
      income before minority interests                                     |       | 687         |   | 100         |   | 964         |  
|                                                                               |       |             |   |             |   |             |  
|Net
      income before amortization of goodwill and unusual items             |       | 818         |   | 334         |   | 846         |  
|                                                                               |       |             |   |             |   |             |  
|                                                                               |       |             |   |             |   |             |  
|Earnings
      per share before amortization of goodwill and unusual           |       |             |   |             |   |             |  
|items                                                                          |       | 1.67        |   | 0.68        |   | 1.75        |  
|                                                                               |       |             |   |             |   |             |  
|Earnings
      per share                                                       |       | 1.14        |   | 0.02        |   | 1.49        |  
|Number
      of common shares and share equivalents (1)                        |       | 488,852,554 |   | 488,064,659 |   | 484,800,930 |  
|                                                                               |       |             |   |             |   |             |  
|Fully
      diluted earnings per share before amortization of goodwill         |       |             |   |             |   |             |  
|and
      unusual items                                                        |       | 1.67        |   | 0.68        |   | 1.75        |  
|Number
      of common shares and share equivalents after dilution (1)         |       | 488,852,554 |   | 488,072,374 |   | 484,886,474 |  
|                                                                               |       |             |   |             |   |             |  

F-2

---

CONSOLIDATED
  BALANCE SHEET AS OF DECEMBER 31, 2002

|                                                        |       |  |        |  |        |  |        | 
|------------------------------------------------------- | ----- |  | ------ |  | ------ |  | ------ | 
|ASSETS                                                  | NOTES |  | 2002   |  | 2001   |  | 2000   | 
|(EUR
      millions)                                    |       |  |        |  |        |  |        | 
|                                                        |       |  |        |  |        |  |        | 
|Current
      assets                                    |       |  |        |  |        |  |        | 
|                                                        |       |  |        |  |        |  |        | 
|Cash
      and cash equivalents                         | 4     |  | 812    |  | 795    |  | 695    | 
|                                                        |       |  |        |  |        |  |        | 
|Short-term
      investments                            | 4     |  | 60     |  | 622    |  | 1,326  | 
|                                                        |       |  |        |  |        |  |        | 
|Treasury
      shares                                   | 5     |  | 544    |  | 1,046  |  | 1,289  | 
|                                                        |       |  |        |  |        |  |        | 
|Trade
      accounts receivable                         | 6     |  | 1,327  |  | 1,538  |  | 1,638  | 
|                                                        |       |  |        |  |        |  |        | 
|Deferred
      income taxes - net                       | 26    |  | 555    |  | 544    |  | 266    | 
|                                                        |       |  |        |  |        |  |        | 
|Inventories
      and work-in-progress                  | 7     |  | 3,427  |  | 3,655  |  | 3,382  | 
|                                                        |       |  |        |  |        |  |        | 
|Prepaid
      expenses and other current assets         | 8     |  | 1,202  |  | 1,352  |  | 1,596  | 
|                                                        |       |  |        |  |        |  |        | 
|Total                                                   |       |  | 7,927  |  | 9,552  |  | 10,192 | 
|                                                        |       |  |        |  |        |  |        | 
|Investments
      and other assets                      |       |  |        |  |        |  |        | 
|                                                        |       |  |        |  |        |  |        | 
|Investments
      accounted for using the equity method | 9     |  | 68     |  | 77     |  | 21     | 
|                                                        |       |  |        |  |        |  |        | 
|Unconsolidated
      investments and other investments  | 10    |  | 869    |  | 1,386  |  | 1,892  | 
|                                                        |       |  |        |  |        |  |        | 
|Treasury
      shares                                   | 5     |  | 362    |  | 318    |  | 156    | 
|                                                        |       |  |        |  |        |  |        | 
|Other
      non-current assets                          |       |  | 511    |  | 467    |  | 307    | 
|                                                        |       |  |        |  |        |  |        | 
|Goodwill
      and similar intangible assets - net      | 11    |  | 3,631  |  | 3,516  |  | 3,842  | 
|                                                        |       |  |        |  |        |  |        | 
|Brands
      and other intangible assets - net          | 12    |  | 4,199  |  | 4,308  |  | 3,415  | 
|                                                        |       |  |        |  |        |  |        | 
|Property,
      plant and equipment - net               | 13    |  | 3,850  |  | 4,208  |  | 3,367  | 
|                                                        |       |  |        |  |        |  |        | 
|Total                                                   |       |  | 13,490 |  | 14,280 |  | 13,000 | 
|                                                        |       |  |        |  |        |  |        | 
|Total                                                   |       |  | 21,417 |  | 23,832 |  | 23,192 | 
|                                                        |       |  |        |  |        |  |        | 

F-3

---

|                                                     |       |  |        |   |        |   |        |  
|---------------------------------------------------- | ----- |  | ------ | - | ------ | - | ------ | -
|LIABILITIES
      AND STOCKHOLDERS' EQUITY           | NOTES |  | 2002   |   | 2001   |   | 2000   |  
|(EUR
      millions)                                 |       |  |        |   |        |   |        |  
|                                                     |       |  |        |   |        |   |        |  
|Current
      liabilities                            |       |  |        |   |        |   |        |  
|                                                     |       |  |        |   |        |   |        |  
|Short-term
      borrowings                          | 14    |  | 2,304  |   | 3,765  |   | 5,333  |  
|Accounts
      payable                               |       |  | 1,429  |   | 1,401  |   | 1,305  |  
|Accrued
      expenses and other current liabilities | 15    |  | 2,533  |   | 2,622  |   | 2,371  |  
|Income
      taxes                                   |       |  | 61     |   | -      |   | 318    |  
|Current
      portion of long-term debt              | 16    |  | 274    |   | 238    |   | 235    |  
|                                                     |       |  |        |   |        |   |        |  
|Total                                                |       |  | 6,601  |   | 8,026  |   | 9,562  |  
|                                                     |       |  |        |   |        |   |        |  
|Deferred
      income taxes - net                    | 26    |  | 125    |   | 169    |   | 110    |  
|                                                     |       |  |        |   |        |   |        |  
|Long-term
      liabilities                          |       |  |        |   |        |   |        |  
|Long-term
      debt, less current portion           | 16    |  | 4,554  |   | 5,402  |   | 3,498  |  
|Other
      long-term liabilities                    | 17    |  | 1,073  |   | 1,250  |   | 1,164  |  
|Repackaged
      notes                               | 18    |  | 222    |   | 284    |   | 346    |  
|                                                     |       |  |        |   |        |   |        |  
|Total                                                |       |  | 5,849  |   | 6,936  |   | 5,008  |  
|                                                     |       |  |        |   |        |   |        |  
|Minority
      interests in subsidiaries             | 19    |  | 1,772  |   | 1,800  |   | 1,481  |  
|                                                     |       |  |        |   |        |   |        |  
|Stockholders'
      equity                           |       |  |        |   |        |   |        |  
|Common
      stock                                   |       |  | 147    |   | 147    |   | 147    |  
|Additional
      paid-in capital                     |       |  | 1,736  |   | 1,736  |   | 1,735  |  
|Cumulative
      translation adjustment              |       |  | (222   | ) | (140   | ) | (133   | )
|Retained
      earnings                              |       |  | 5,409  |   | 5,158  |   | 5,282  |  
|                                                     |       |  |        |   |        |   |        |  
|Total                                                | 20    |  | 7,070  |   | 6,901  |   | 7,031  |  
|                                                     |       |  |        |   |        |   |        |  
|Total                                                |       |  | 21,417 |   | 23,832 |   | 23,192 |  
|                                                     |       |  |        |   |        |   |        |  

F-4

---

CONSOLIDATED
  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

|                                              |                 |        |            |          |   |             |   |               |  
|--------------------------------------------- | --------------- | ------ | ---------- | -------- | - | ----------- | - | ------------- | -
|                                              | Number
      of | Common | Additional | Retained |   | Cumulative  |   | Stockholders' |  
|(EUR
      millions)                          | shares          | stock  | paid-in    | earnings |   | translation |   | equity        |  
|                                              |                 |        | capital    |          |   | adjustment  |   |               |  
|                                              |                 |        |            |          |   |             |   |               |  
|As
      of January 1, 2000                   | 97,957,650      | 147    | 1,734      | 4,946    |   | (123        | ) | 6,704         |  
|                                              |                 |        |            |          |   |             |   |               |  
|Final
      dividend paid on 1999 income      |                 |        |            | (222     | ) |             |   | (222          | )
|and related
      taxation                    |                 |        |            | (1       | ) |             |   | (1            | )
|Long-term
      investment in LVMH shares (1) |                 |        |            | (62      | ) |             |   | (62           | )
|Employee
      stock option plans             | 26,587          |        | 1          |          |   |             |   | 1             |  
|Five-for-one
      stock split                | 391,874,108     |        |            |          |   |             |   | -             |  
|Net income                                    |                 |        |            | 722      |   |             |   | 722           |  
|Interim
      dividend paid on 2000 income    |                 |        |            | (101     | ) |             |   | (101          | )
|Foreign
      currency translation            |                 |        |            |          |   | (10         | ) | (10           | )
|                                              |                 |        |            |          |   |             |   |               |  
|As
      of December 31, 2000                 | 489,858,345     | 147    | 1,735      | 5,282    |   | (133        | ) | 7,031         |  
|                                              |                 |        |            |          |   |             |   |               |  
|Final
      dividend paid on 2000 income      |                 |        |            | (244     | ) |             |   | (244          | )
|and related
      taxation                    |                 |        |            |          |   |             |   | -             |  
|Long-term
      investment in LVMH shares (1) |                 |        |            | 211      |   |             |   | 211           |  
|Employee
      stock option plans             | 42,770          |        | 1          |          |   |             |   | 1             |  
|Net income                                    |                 |        |            | 10       |   |             |   | 10            |  
|Interim
      dividend paid on 2001 income    |                 |        |            | (101     | ) |             |   | (101          | )
|Foreign
      currency translation            |                 |        |            |          |   | (7          | ) | (7            | )
|                                              |                 |        |            |          |   |             |   |               |  
|As
      of December 31, 2001                 | 489,901,115     | 147    | 1,736      | 5,158    |   | (140        | ) | 6,901         |  
|                                              |                 |        |            |          |   |             |   |               |  
|Final
      dividend paid on 2001 income      |                 |        |            | (246     | ) |             |   | (246          | )
|and related
      taxation                    |                 |        |            |          |   |             |   | -             |  
|Long-term
      investment in LVMH shares (1) |                 |        |            | 44       |   |             |   | 44            |  
|Employee
      stock option plans             | 36,295          |        |            |          |   |             |   | -             |  
|Net income                                    |                 |        |            | 556      |   |             |   | 556           |  
|Interim
      dividend paid on 2002 income    |                 |        |            | (103     | ) |             |   | (103          | )
|Foreign
      currency translation            |                 |        |            |          |   | (82         | ) | (82           | )
|                                              |                 |        |            |          |   |             |   |               |  
|As
      of December 31, 2002                 | 489,937,410     | 147    | 1,736      | 5,409    |   | (222        | ) | 7,070         |  
|                                              |                 |        |            |          |   |             |   |               |  

|(1) | Refer
      to Accounting Policies, Note 2.11                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | The
      number of shares recorded as a deduction from stockholders'
      equity as of December 31, 2002, December 31, 2001 and December
      31, 2000 amounted to 370,000, 1,323,142, and 5,234,790,
      respectively, i.e. a value of EUR 16 million in 2002 (EUR
      103 and 301 million in 2001 and 2000).

F-5

---

CONSOLIDATED
  STATEMENT OF CASH FLOWS

|                                                                                                         |         |   |         |   |         |  
|-------------------------------------------------------------------------------------------------------- | ------- | - | ------- | - | ------- | -
|(EUR
      millions)                                                                                     | 2002    |   | 2001    |   | 2000    |  
|                                                                                                         |         |   |         |   |         |  
|I.
      OPERATING ACTIVITIES                                                                            |         |   |         |   |         |  
|Net income                                                                                               | 556     |   | 10      |   | 722     |  
|Minority
      interests                                                                                 | 131     |   | 90      |   | 242     |  
|Equity
      interest in undistributed earnings of associated companies,
      net of dividends received | 17      |   | 46      |   | 36      |  
|Depreciation
      and amortization                                                                      | 1,019   |   | 1,356   |   | 635     |  
|Change
      in provisions                                                                               | (386    | ) | 658     |   | (267    | )
|Change
      in deferred taxes                                                                           | (142    | ) | (304    | ) | 35      |  
|Gain
      (loss) on disposal of fixed assets or treasury shares                                         | 323     |   | (937    | ) | (189    | )
|                                                                                                         |         |   |         |   |         |  
|NET
      CASH PROVIDED BY OPERATING ACTIVITIES BEFORE                                                   |         |   |         |   |         |  
|CHANGES
      IN CURRENT ASSETS AND LIABILITIES                                                          | 1,518   |   | 919     |   | 1,214   |  
|Inventories
      and work-in-progress                                                                   | 33      |   | (358    | ) | (190    | )
|Trade
      accounts receivable                                                                          | 64      |   | 128     |   | (54     | )
|Accounts
      payable                                                                                   | 82      |   | (25     | ) | 98      |  
|Other
      current assets and liabilities                                                               | 257     |   | (90     | ) | (209    | )
|                                                                                                         |         |   |         |   |         |  
|NET
      CHANGE IN CURRENT ASSETS AND LIABILITIES                                                       | 436     |   | (345    | ) | (355    | )
|NET
      CASH PROVIDED BY OPERATING ACTIVITIES                                                          | 1,954   |   | 574     |   | 859     |  
|II.
      INVESTING ACTIVITIES                                                                           |         |   |         |   |         |  
|Purchases
      of brands and other intangible assets                                                    | (80     | ) | (80     | ) | (63     | )
|Purchases
      of property, plant and equipment                                                         | (479    | ) | (904    | ) | (794    | )
|Sale
      of non-financial fixed assets                                                                 | 177     |   | 149     |   | 86      |  
|Acquisitions
      of investments                                                                        | (92     | ) | (445    | ) | (399    | )
|Reclassifications
      between investments and short-term investments                                   | -       |   | (677    | ) | 817     |  
|Proceeds
      from sale of unconsolidated investments                                                   | 92      |   | 2,122   |   | 1,195   |  
|Change
      in other non-current assets                                                                 | (182    | ) | (431    | ) | (119    | )
|Net
      effect of acquisitions and disposals of consolidated companies                                 | (160    | ) | (628    | ) | (547    | )
|                                                                                                         |         |   |         |   |         |  
|NET
      CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                                | (724    | ) | (894    | ) | 176     |  
|III.
      FINANCING ACTIVITIES                                                                          |         |   |         |   |         |  
|Proceeds
      from issuances of common stock                                                            | 13      |   | 38      |   | 11      |  
|Change
      in treasury shares                                                                          | 516     |   | (13     | ) | (339    | )
|Dividends
      and interim dividends paid by the parent company (including
      related tax)           | (349    | ) | (343    | ) | (322    | )
|Dividends
      and interim dividends paid to minority interests of consolidated
      subsidiaries      | (23     | ) | (171    | ) | (70     | )
|Proceeds
      from short-term borrowings and long-term debt                                             | 523     |   | 2,469   |   | 2,256   |  
|Principal
      repayments on short-term borrowings and long-term debt                                   | (2,408  | ) | (2,294  | ) | (1,286  | )
|Change
      in listed securities                                                                        | 182     |   | 880     |   | (1,071  | )
|                                                                                                         |         |   |         |   |         |  
|NET
      CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                                                | (1,546  | ) | 566     |   | (821    | )
|IV.
      EFFECT OF EXCHANGE RATE FLUCTUATIONS                                                           | (18     | ) | 2       |   | (22     | )
|                                                                                                         |         |   |         |   |         |  
|NET
      INCREASE/DECREASE IN CASH AND CASH EQUIVALENTS                                                 | (334    | ) | 248     |   | 192     |  
|                                                                                                         |         |   |         |   |         |  
|**CASH
      AND CASH EQUIVALENTS AT BEGINNING OF YEAR (net of bank overdraft)**                         | **878** |   | **630** |   | **438** |  
|**CASH
      AND CASH EQUIVALENTS AT YEAR-END (net of bank overdraft)**                                  | **544** |   | **878** |   | **630** |  
|                                                                                                         |         |   |         |   |         |  
|Non-cash
      transactions:                                                                             |         |   |         |   |         |  
|- Increase
      of capital through conversion of debt                                                   | -       |   | -       |   | -       |  
|- Lease
      financing operations                                                                       | 3       |   | 16      |   | 7       |  
|                                                                                                         |         |   |         |   |         |  

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.

The reconciliation
  between cash and cash equivalents at year-end, as shown in the
  statement of cash flows, and the cash and cash equivalents account
  as shown in the balance sheet is shown in Note 4.

F-6

---

NOTES
  TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE
  OF OPERATIONS

LVMH Moët
  Hennessy Louis Vuitton is an international group, headquartered
  in Paris (France), principally engaged in the production and
  sale of prestigious luxury goods under world-famous brand names,
  among which, prestigious champagnes, wines, cognacs and spirits,
  as well as luxury goods, luggage and leather goods, fragrance
  and cosmetics products, watches and jewelry. The Group is also
  engaged in the haute couture and fashion businesses.

LVMHs
  business consists of five principal business groups: Wines and
  Spirits, Fashion and Leather Goods, Perfumes and Cosmetics,
  Watches and Jewelry and Selective retailing. In addition, LVMH
  has interests in financial media companies and in auction art
  sales, included under Other Activities.

An important
  part of the production is located in France, but sold through
  subsidiaries worldwide, in five major geographical zones: France,
  Europe, the United States, Japan and the Far East.

Champagne,
  wines, cognacs and spirits are distributed principally through
  affiliates in the joint network with Diageo plc., or through
  a network of independent distributors. Luxury goods are distributed
  through various channels, depending upon the brand and company
  concerned, including exclusive independent retail outlets, selected
  specialized retail outlets, franchisees and duty-free operators;
  however, a significant part of sales is made through the integrated
  company-owned retail network.

In addition,
  the Group has developed a multi-brand selective retailing business,
  including department stores, duty-free boutiques as well as
  specialized distribution networks.

2. ACCOUNTING
  POLICIES

2.1
  General

The consolidated
  financial statements of LVMH have been prepared in accordance
  with French accounting principles as defined by the French law
  of January 3, 1985 andCRC
  (Comité de Réglementation Comptable
  French Accounting Regulations Committee) regulation No. 99-02,
  published on June 22, 1999. The adoption of this new regulation,
  effective as from January 1, 2000, had no material impact on
  stockholders' equity and Group earnings.

Although
  its shares are no longer listed on the NASDAQ, LVMH remains
  registered with the Securities and Exchange Commission (SEC);
  in this respect, it prepares a table of concordance between
  its income and stockholders equity under French accounting
  standards and the income and stockholders' equity that would
  be reported under US GAAP, included in Form 20F filed with the
  SEC (see Note 34, Summary of differences between accounting
  principles adopted by LVMH and generally accepted accounting
  principles in the United States).

F-7

---

2.2 Principles
  of consolidation

The accounts
  of subsidiaries in which LVMH either directly or indirectly
  holds a controlling interest are fully consolidated.

Companies
  controlled jointly by LVMH and another party are consolidated
  using the proportional consolidation method.

For the distribution
  subsidiaries which are operated as joint ventures with the Diageo
  group, only the portion of assets and liabilities and results
  of operations relating to LVMH activity is included in the accompanying
  financial statements (see Note 2.17).

Companies
  where LVMH has a significant influence but no controlling interest
  are accounted for using the equity method.

2.3 Foreign
  currency translation, hedging of exchange and interest rate
  risks

The consolidated
  financial statements are stated in euros; the accounts of subsidiaries
  using a different functional currency are converted into euros:

|- | at
      the exchange rate prevailing at year-end for balance sheet
      items;      
|- | --------------------------------------------------------------------------------------
|- | at
      the average rates for the financial year for statement of
      income items.

Translation
  adjustments arising from the application of these rates are
  recorded in stockholders' equity under "Cumulative translation
  adjustment".

Foreign currency
  transactions carried out by consolidated companies are converted
  to their functional currency at the exchange rate prevailing
  at the transaction date.

Trade receivables
  and debts denominated in foreign currency are converted at the
  exchange rate prevailing on December 31. The unrealized losses
  and gains resulting from this translation are recorded in the
  statement of income, except when they result from the translation
  of foreign currency debt or other instruments designated as
  hedges of long-term investments in the same currency, in which
  case they are recorded in stockholders equity under "Cumulative
  translation adjustment".

Foreign exchange
  gains and losses arising from the translation of intercompany
  transactions or intercompany receivables and debts denominated
  in foreign currency, or from their elimination, are recorded
  in the statement of income, unless they relate to long-term
  intercompany financing operations and can be considered comparable
  to investments, in which case they are recorded in stockholders'
  equity under "Cumulative translation adjustment".

Foreign exchange
  futures and option contracts are revalued using the year-end
  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 liabilitieshedged by these instruments;
|- | -------------------------------------------------------------------------------------------------------------------------------------------
|- | deferred
      if the instruments have been designated as hedges of transactions
      for the followingaccounting
      period;           
|- | recorded
      as income or losses for the period if they have not been
      designated as hedges.                                        

Deferred
  unrealized gains and losses are included in Other current
  assets" or "Other current liabilities".

Foreign exchange
  gains and losses arising from contracts hedging commercial risks
  are recorded as operating income or expenses to offset gains
  and losses recognized on such risks, except for premiums and
  discounts on forward contracts, which are recorded on a pro
  rata basis as financial income and expenses. Foreign exchange
  gains and losses arising from contracts hedging financial risks
  are recorded as financial income or expenses.

Gains and
  losses resulting from interest rate hedging contracts (swap
  contracts, caps, FRAs, collars, etc.) are accounted for on a
  pro rata basis over the period of the related contracts.

F-8


---

2.4
  Brands and other intangible assets

Only the
  acquired brands that are well known and individually identifiable
  are recognized as assets at their values calculated on the date
  of their acquisition. These brands are not amortized.

Expenses
  incurred in creating a new brand or developing an existing one
  are recorded under expenses.

Other intangible
  assets are amortized over their probable useful lives:

|- Leasehold
      acquisition rights | duration
      of lease
|------------------------------------ | -----------------------
|- Software                           | 1
      to 5 years     

A provision
  for impairment is recorded when a brand's carrying value becomes
  permanently impaired, and is calculated according to the methods
  described in Note 12. The provision is recorded for the amount
  of the difference between book value and actual value.

Goodwill and similar intangible assets

Goodwill
  is defined as the difference between the purchase price of acquired
  businesses and the Groups share of their underlying net
  assets at the date of acquisition. This calculation is made
  after the net assets of the acquired company have been restated
  in line with the Group accounting policies and after revaluation
  to fair value, when fair value differs from net book value at
  the purchase date.

The value
  of certain intangible assets such as trade names, market shares,
  business assets (fonds
  de commerce) or distribution rights
  are reported under the caption goodwill and other similar intangible
  assets.

For all acquisitions
  subsequent to January 1, 2000, goodwill is recorded in the functional
  currency of the acquired company. It had previously been reported
  in euros.

Goodwill
  is amortized over periods ranging from 5 to 40 years, depending
  on its estimated useful life as of the date of first consolidation.
  This estimate is made by taking into account the rank of the
  acquired company on its market, particularly in terms of positioning,
  number of years of existence and geographical location.

Goodwill
  from businesses acquired under French regulations (fonds
  de commerce) is amortized over a period
  which may not exceed 18 years.

Exceptional
  amortization is recorded for any permanent difference between
  the book value of goodwill and its actual value, and is calculated
  using the methods described in Note 12.

Property, plant and equipment

Property,
  plant and equipment is stated at historical cost, excluding
  subsequent revaluations, and includes, as the case may be, the
  interest expense capitalized during the period prior to the
  date when the asset is placed in service.

Assets acquired
  under capital leases or long-term rental agreements are recorded
  on the basis of the present value of future lease payments.

Depreciation
  is charged using the straight-line method over the estimated
  useful lives of the assets:

|- Buildings                           | 20
      to 50 years
|------------------------------------- | --------------------
|- Machinery
      and equipment       | 3
      to 20 years 
|- Retail
      leasehold improvements | 3
      to 10 years 
|- Vineyards                           | 18
      to 25 years

Vineyard
  preparation and development costs are capitalized until the
  vineyards become commercially productive (generally for a period
  of three years) and are included in "tangible assets in progress".

F-9

---

2.7
  Unconsolidated investments

Unconsolidated
  investments are recorded at acquisition cost.

A provision
  is recorded for any other than temporary difference between
  the fair value for the Group of such an investment and its net
  book value.

The fair
  value of investments is measured according to such criteria
  as the value of the Group share in the net assets, the stock
  price or earnings and cash flow prospects, weighted by the effects
  of holding these investments in terms of the Group strategy,
  or synergies with existing businesses.

2.8
  Inventories and work-in-progress

Inventories
  are recorded at cost, excluding financial expenses, although
  this may not exceed the net realizable v alue; the cost price
  comprises production cost (finished goods) or purchase price,
  plus incidental costs (raw materials, merchandise).

Inventories
  are valued according to the weighted average cost method or
  using the FIFO method. Due to the length of the aging process
  for champagne and cognac, a substantial portion of these inventories
  is not sold within one year. However, in accordance with industry
  practices, these are nevertheless classified as current assets.

2.9
  Trade accounts receivable and other receivables

Receivables
  are recorded at their face value. An provision for doubtful
  accounts is recorded based on the probability of their collection.

2.10
  Short-term investments

Short-term
  investments are stated at the lower of cost or market value.

Shares in
  mutual funds, money market funds and similar investments are
  stated at their official net asset value.

The market
  value of traded securities is determined by reference to the
  average listed price on the related stock exchange during the
  last month of the year, and, if applicable, translated at the
  year-end exchange rate. The market value of non-traded securities
  is based on their estimated realizable value. This calculation
  is determined on a line-by-line basis, and there is no offsetting
  between the capital gains and losses reported.

In the event
  of a partial sale of an investment, the FIFO method or weighted
  average cost method is used to determine the gain or loss to
  be recognized.

F-10

---

2.11
  Treasury shares

LVMH shares
  are recorded at acquisition cost.

Shares held
  by the parent company LVMH SA under French market regulations
  for stock price equalization 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.

LVMH shares
  held for stock option purchase plans are allocated to these
  plans for the duration of the option plan period. A loss provision
  is recorded, when applicable, to bring the acquisition cost
  into line with the anticipated exercise price.

When the
  market value of LVMH shares, calculated in accordance with the
  method described in Note 2.10 above, falls below their acquisition
  cost or their exercise price in the case of stock option plans,
  a provision is recorded.

LVMH shares
  held by the group on a long-term basis, or for the purpose of
  future cancellation or exchange, are recorded as a deduction
  from stockholders' equity, including the related capital gains
  or losses realized.

2.12
  Cash and cash equivalents

Cash and
  cash equivalents include cash in banks and short-term deposits
  which are immediately available (except for blocked accounts).

2.13
  Pensions, medical costs and other employee commitments

When payments
  are made by the group in respect of pensions, medical costs
  and other commitments to third party organizations managing
  the payment of welfare benefits or expense reimbursements, such
  payments are expensed in the year in which they fall due, with
  no liability being recorded in this respect on the balance sheet.

When pensions,
  medical costs and other commitments are paid directly by the
  group companies, a provision is booked in the balance sheet
  for the amount of the corresponding actuarial liability, and
  any changes in this commitment are recorded in expenses for
  the period.

When this
  commitment is either partially or wholly funded by payments
  made by group companies to external fund managers, the amount
  of the corresponding plan assets is deducted from the actuarial
  liability booked on the balance sheet.

The actuarial
  liability is calculated on the basis of evaluations specific
  to each country and including, in particular, assumptions regarding
  the increase in salaries, inflation, life expectancy, staff
  turnover and the return on plan assets.

Cumulative
  actuarial gains or losses are amortized when such gains or losses
  exceed 10% of the amount of the commitment, or of the market
  value of these plan assets as of year-end. These gains or losses
  are amortized over the average remaining active life of the
  employees concerned as from the period following the year in
  which such gains or losses were recorded.

2.14
  Research and development costs

Research
  and development costs are expensed in the year they are incurred.

2.15
  Bonds

Bond issuance
  premiums and issuance costs are amortized over the life of the
  debt.

F-11

---

2.16
  Income taxes and deferred taxation

Deferred
  taxes are booked to reflect timing differences arising between
  the net assets of consolidated companies as reported in the
  consolidated financial statements and the amount resulting from
  the application of tax regulations. These amounts are recorded
  on the basis of the tax rates known at year-end.

Future tax
  savings from tax losses carried forward are only recorded as
  deferred tax assets when their recovery is deemed likely.

Taxes that
  would become payable by the Group in the event of distribution
  of the retained earnings of subsidiaries are provided for if
  such a distribution is probable.

2.17
  Recognition of income

- Net salesThe Groups revenue transactions include
    direct sales to customers and sales through distributors.
    Sales made directly to customers are made through retail outlets
    for fashion and leather goods, certain perfumes and cosmetics,
    certain watches and jewelry. These sales are recognized at
    the time of purchase by the retail customers. Sales through
    distributors are made for wine and spirits, certain perfumes
    and cosmetics and certain watches. The Group recognizes revenue
    only when title transfers to unaffiliated customers. For items
    shipped to independent distributors, title transfers on shipment
    of products from the Group facilities.
    LVMH
      has several contractual distribution arrangements with Diageo
      plc. generally established by contractual shareholders
      agreements. LVMH and Diageo plc use these distribution arrangements
      as a means of delivering and selling their products to outside
      customers. The distribution arrangements contractually define
      the calculation of results and assets that are attributable
      to each partner. As a result, LVMH only records revenue
      and the direct costs associated with the sales and distribution
      of its own products.
- Accounting
    for sales returnsCompanies in the Perfumes and Cosmetics business
    group repurchase unsold or outdated products from their distributors.
    The estimated costs of such repurchases are provided upon
    a percentage of sales and gross margin of the related period.
    Under
      both US and French GAAP, provisions are estimated and recorded
      for the right of return from distributors in the same period
      as the related sales.
- Accounting
    for shipping and handling costsThe Group classifies amounts reimbursed by customers
    for shipping and handling costs as revenues. The costs incurred
    by the Group for transportation and handling are included
    in selling expenses.
- Accounting
    for slotting fees and cooperative advertisingThe Group pays amounts for shelf space and cooperative
    advertising programs primarily in the Wine and Spirits business
    group. The amounts incurred for these slotting fees and cooperative
    advertising are recorded as advertising expenses in the Group
    consolidated financial statements.

F-12

---

2.18
  Income from operations; other income and expenses, and unusual
  items

The Group's
  main business is the management and development of its brands
  and trade names. Income from operations is derived from these
  activities, whether recurring or non recurring, core or incidental
  operations.

Other income
  and expenses comprise statement of income items, which, due
  to their nature or frequency, may not be considered as inherent
  to the Group's main business.

Other income
  and expenses of a material amount and of an exceptional nature
  are recorded as unusual items. Unusual items are presented net
  of tax and minority interests.

Income before
  taxes is the same as "net current income from consolidated companies".

Net current
  income comprises income after tax excluding amortization of
  goodwill and before unusual items.

2.19
  Earnings per share

Earnings
  per share are calculated based on the weighted average number
  of common shares outstanding during the year, excluding the
  treasury shares deducted from stockholders' equity.

Fully diluted
  earnings per share are computed based on the weighted average
  number of common shares outstanding during the year, less those
  shares deducted from stockholders' equity, plus any shares which
  would result from the conversion of outstanding convertible
  debt and the exercise of all existing options. This calculation
  takes into account the reduction of the related interest expense,
  provisions for redemption premiums, and the corresponding tax
  effect.

F-13

---

3. CHANGES
  IN THE SCOPE OF CONSOLIDATION

3.1
  In 2002

Wines
  and Spirits

In July 2002,
  LVMH acquired a 40% stake in Millennium Import LLC for 76 million
  US dollars. Millenium Import LLC produces luxury vodka distributed
  under the brand names Belvédère and Chopin. The
  investment in Millennium was accounted for using the equity
  method as from this date. This transaction gave rise to an intangible
  asset of 71 million US dollars, which is amortized over 15 years,
  and represents the permanent distribution license held by Millenium
  for these brands in the US.

In May 2002,
  the Group sold the Pommery brand for a price of EUR 152 million.
  This sale also included the administrative and production sites,
  the wine cellars, inventories and distribution agreements, with
  the exception of the vineyards. Pommery's business activities
  were no longer consolidated as from this date.

Fashion
  and Leather Goods

Donna Karan
  International Inc, ("DKI"), which was acquired in December 2001,
  (see below: changes in the scope of consolidation in 2001) was
  fully consolidated as of January 1, 2002. The total amount of
  the investment in Gabrielle Studio and DKI was allocated to
  the Donna Karan brand for EUR 494 million; the goodwill, amounting
  to US dollars 224 million, will be amortized over 20 years.

During the
  period, LVMH increased its interest in the Fendi group from
  51% to 67%. This investment, amounting to EUR 196 million, generated
  additional goodwill of EUR 75 million. (Refer also to Note 33:
  Subsequent events).

Since January
  1, 2002, the Emilio Pucci group, which was acquired in 2001
  for EUR 38 million, has been fully consolidated. The investment
  was allocated to the Pucci brand for EUR 17 million. The remaining
  goodwill will be amortized over a period of 20 years.

Finally,
  LVMH increased its stake in Thomas Pink from 70% to 100%. This
  investment amounted to EUR 28 million.

Perfumes
  and Cosmetics

In December
  2002, the group sold the Hard Candy and Urban Decay brands for
  a price of 1 million US dollars. This amount may vary over three
  years due to a price index clause; the 2002 net income of these
  entities were included in consolidated net income until the
  sale took place.

Other
  Activities

Based on
  an agreement of May 2002, LVMH's interest in Phillips was reduced
  from 75% to 27.5%, and its controlling interest was sold to
  the company's former directors, Daniella Luxembourg and Simon
  de Pury. Within the scope of this agreement, LVMH restored the
  Phillips group's financial situation by canceling its debt.
  In return, LVMH received Phillips' fixed assets and inventories.
  Phillips was deconsolidated as from January 1, 2002, as its
  activity over the first few months of the year was not significant.
  (Refer also to Note 33: Subsequent events).

F-14

---

3.2
  In 2001

Wines
  and Spirits

At the end
  of 2000, the Group acquired 60% of the Newton (Nappa Valley,
  California) winegrowing estate and 90% of the MountAdam (Eden
  Valley, southern Australia) winegrowing estate for EUR 34.5
  million. These investments were fully consolidated over the
  entire 2001 fiscal year.

Fashion
  and Leather Goods

Based on
  an agreement entered into in December 2000, in January 2001
  LVMH acquired 100% of Gabrielle Studio, an American company
  and owner of the Donna Karan New York brand, for 405 million
  US dollars.

Furthermore,
  in March 2001, LVMH drafted a merger agreement with the owner
  of the exclusive license for use of the Donna Karan brand, Donna
  Karan International Inc ("DKI", a company listed on the New
  York stock exchange). This agreement consisted of:

|- | the
      contribution by LVMH to DKI of its interest in Gabrielle
      Studio                                                                                    
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | an
      offer by LVMH to purchase substantially all of the stock
      of DKI at a price of 10.75 US dollars pershare,
      or a total of 185 million US dollars.

This draft
  agreement was approved by DKI's General Meeting of November
  27, 2001. Following this transaction, LVMH owns 100% of the
  preferred stock and 89.4% of the common stock of the new Donna
  Karan group.

Gabrielle
  Studio was fully consolidated over the entire fiscal year. The
  Donna Karan International business was only consolidated as
  from 2002.

The investment
  in Gabrielle Studio (405 million US dollars) was allocated in
  full to the value of the Donna Karan New York brand.

In December
  2001, LVMH's interest in Fendi increased from 25.5 % to 51%
  as a result of its acquisition of Prada's stake in their former
  50/50 joint venture (see below: Changes in the scope of consolidation
  in 2000). This transaction represents an additional investment
  of EUR 295 million, of which EUR 255 million will be paid over
  a four-year period. The majority of this amount (EUR 404 million
  [EUR 206 million - Group share]) was allocated to the value
  of the Fendi brand and EUR 136 million was recorded as additional
  goodwill to be amortized over 30 years.

The Fendi
  investment was consolidated on a proportionate basis as of July
  2000; however, the full consolidation method has been used since
  December 31, 2001.

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.

Selective
  Retailing

In January
  2001, LVMH acquired 55% of the Paris department store La Samaritaine
  for EUR 256 million, including EUR 88 million through a reserved
  capital increase.

The price
  paid corresponds, in particular, to a number of real estate
  assets, which include buildings other than the one housing the
  department store, estimated at EUR 471 million (EUR 182 million
  Group share - after deferred tax). The related goodwill
  of EUR 57 million, included the value of the trade name, will
  be amortized over 20 years. La Samaritaine has been fully consolidated
  since January 1, 2001.

F-15

---

Watches
  and Jewelry

In January
  2001, LVMH and the De Beers group entered into an agreement
  to form a 50/50 joint venture. This agreement was approved by
  the European Commission in July 2001. 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. This joint venture has been accounted for
  using the equity method since 2001.

Other
  Activities

In January
  2001, the founders of the Geneva art gallery de Pury et Luxembourg
  Art, Mrs. Daniella Luxembourg and Mr. Simon de Pury, contributed
  their entire interest in de Pury et Luxembourg Art to Phillips.
  This contribution was remunerated with a 25% interest in Phillips,
  and a payment of 10 million US dollars. Following this operation,
  Phillips was renamed Phillips, de Pury & Luxembourg (PPL).
  In November 2001, within the framework of a memorandum of agreement
  drawn up in July, PPL's UK activities and the activities of
  the British auction company Bonhams & Brooks were merged
  within a joint venture held by PPL at 49.9%, with PPL keeping
  control of its international activities.

The transfer
  of de Pury & Luxembourg Art to Phillips generated goodwill
  of EUR 54 million, in addition 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 50% stake in the luxury product internet site e-Luxury
  was increased to 99.99%, by means of subscription to a capital
  increase. This transaction gave rise to goodwill of EUR 45 million,
  corresponding to the value of the clientele and prior site development
  costs. e-Luxury was accounted for using the equity method as
  of January 1, 2001 and was fully consolidated as of December
  31, 2001.

In January
  2001, the Télématique Victoire Multimédia
  business was transferred by LVMH to the Jet Multimedia group
  in exchange for 479,125 shares in Jet Multimedia with a guaranteed
  price. This sale gave rise to a capital gain of EUR 25 million
  before tax.

3.3
  In 2000:

Fashion
  and Leather Goods

In July 2000,
  pursuant to the memorandum of agreement signed at the end of
  1999, LVMH acquired 51% of the Italian Group Fendi with the
  Prada Group. EUR 404 million of the total EUR 564 million paid
  by the joint venture corresponds to the value recorded for the
  Fendi brand, and EUR 92 million to goodwill.

Fendi was
  consolidated using the proportionate method as from July 1 for
  50%, including 25.50% for LVMH's share.

Perfumes
  and Cosmetics

In 1999,
  LVMH acquired 70% of the US company BeneFit Cosmetics for EUR
  67 million, the value of the BeneFit brand comprising the majority
  of the price paid.

Other acquisitions
  in 1999 include 73% of the French company Make Up For Ever,
  and 94% of the US cosmetics company Hard Candy and 100% of Urban
  Decay: these three investments represent a total amount of EUR
  42 million.

All of these
  companies were fully consolidated over the entire period.

F-16

---

Watches
  and Jewelry

In addition
  to the investment in TAG Heuer, LVMH acquired all of the capital
  of the watch companies Ebel and Zenith at the end of 1999, for
  EUR 19 million and 75 million respectively, as well as 100%
  of Chaumet, the famous Paris jeweler, for EUR 47 million.

The values
  attributed to these brands are EUR 125 million for Ebel, EUR
  58 million for Zenith, and EUR 33 million for Chaumet.

These investments
  were consolidated over the entire period.

Selective
  Retailing

In addition
  to "Laguna", the Italian name acquired at the end of 1999, the
  Sephora sub-group acquired 100% of the owner of the Italian
  brand Boïdi in February 2000, and 50% of the
  companies owning the Italian and Greek brands, Carmen
  and Beauty Shop in July. The total investment of
  EUR 154 million was considered to represent the value of these
  four brands. The related goodwill is amortized over a period
  of 10 to 15 years. The investments in Laguna and Boïdi
  were consolidated over the entire period, and the investments
  in Carmen and Marinopoulos (owner of the Beauty shop brand)
  have been consolidated since 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, to be amortized over 20 years. The investment
  was consolidated over the entire period.

Other
  Activities

At year end
  1999, LVMH acquired the Phillips auction house for EUR 90 million.
  The corresponding goodwill of EUR 95 million is amortized over
  30 years. Phillips has been consolidated since January 1, 2000.

3.4
  Summarized pro forma information and impact on cash flow:

A simplified
  pro forma statement of income is presented below for 2001 and
  2002, on the basis of a comparable group structure taking into
  account, as of January 1, 2001, the changes that occurred in
  the scope of consolidation in 2002 and over less than 12 months
  in 2001:

|- | in
      2002: the consolidation of Donna Karan International and
      Emilio Pucci, the additional investments in
      Fendi and Thomas Pink, the accounting for Millennium using
      the equity method, and the sale of the
      Pommery business.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | In
      2001: the additional investment in Fendi, and the deconsolidation
      of Phillips.                                                                                                                                                            

These pro
  forma data do not necessarily represent the results that would
  in fact have been reported in the consolidated financial statements
  if the transactions described had occurred at the specified
  date Moreover, they may not be presumed to indicate the future
  evolution in the Group's consolidated results

F-17

---

|                                                                   |                 |                 |        | 
|------------------------------------------------------------------ | --------------- | --------------- | ------ | 
|                                                                   | 2002            | 2001           
|(EUR
      millions)                                               | pro
      forma | pro
      forma
|                                                                   |                 |                 |        | 
|Net sales                                                          | 12,693          |                 | 12,905 | 
|of
      which: - Wines and Spirits                                | 2,266           |                 | 2,185  | 
|-
      Fashion and Leather Goods                                  | 4,194           |                 | 4,440  | 
|-
      Perfumes and Cosmetics                                     | 2,336           |                 | 2,231  | 
|-
      Watches and Jewelry                                        | 552             |                 | 548    | 
|-
      Selective Retailing                                        | 3,337           |                 | 3,456  | 
|Income
      from operations                                       | 2,008           |                 | 1,700  | 
|Income
      before income taxes                                   | 1,479           |                 | 823    | 
|Net income
      before amortization of goodwill and unusual items | 957             |                 | 462    | 
|Net income
      before unusual items                              | 694             |                 | 255    | 
|                                                                   |                 |                 |        | 

The effect
  of changes in the scope of consolidation on the balance sheet
  as of December 31, 2002 is as follows:

|                                             |     |                                   |     | 
|-------------------------------------------- | --- | --------------------------------- | --- | 
|(EUR
      millions)                         |     |                                   |     | 
|                                             |     |                                   |     | 
|Brands
      and other intangible assets     | 149 | Stockholders'
      equity        | -   | 
|Goodwill                                     | 371 | Minority
      interests          | 54  | 
|Property,
      plant and equipment - net    | 42  |                                   |     | 
|Inventories
      and work in progress - net | 71  | Net
      financial debt          | 395 | 
|Trade
      accounts receivable - net        | 54  | Other
      long-term liabilities | 35  | 
|Other
      assets                           | 75  | Other
      current liabilities   | 278 | 
|                                             |     |                                   |     | 
|Total                                        | 762 |                                   | 762 | 
|                                             |     |                                   |     | 

The effect
  of the changes in the scope of consolidation on Group cash flows,
  as shown in the consolidated statement of cash flows, i.e. net
  of cash from companies that were acquired or sold, and net of
  any deferred payments on these acquisitions, amounts to EUR
  160 million (EUR 628 million in 2001).

This figure
  mainly represents the investments in Fendi (EUR 196 million),
  Millennium (EUR 77 million), Thomas Pink (EUR 28 million), and
  the positive effect of the sale of certain Pommery assets (EUR
  152 million).

In 2001,
  the impact on Group cash flows mainly resulted from the investments
  in Gabrielle Studio, la Samaritaine and de Pury et Luxembourg
  Art SA.

F-18

---

4. SHORT-TERM
  INVESTMENTS, CASH AND CASH EQUIVALENTS

|                                                                             |     |      |     |      |     |       | 
|---------------------------------------------------------------------------- | --- | ---- | --- | ---- | --- | ----- | 
|(EUR
      millions)                                                         |     | 2002 |     | 2001 |     | 2000  | 
|                                                                             |     |      |     |      |     |       | 
|Short-term
      investments:                                                |     |      |     |      |     |       | 
|Listed
      securities                                                      |     | 30   |     | 202  |     | 1,133 | 
|Shares
      of mutual funds                                                 |     | 38   |     | 405  |     | 154   | 
|Negotiable
      debt notes and other unlisted securities                    |     | 9    |     | 49   |     | 86    | 
|Provisions                                                                   | (17 | )    | (34 | )    | (47 | )    
|                                                                             |     |      |     |      |     |       | 
|Net
      book value                                                         |     | 60   |     | 622  |     | 1,326 | 
|                                                                             |     |      |     |      |     |       | 
|Market
      value of short-term investments                                 |     | 61   |     | 692  |     | 1,397 | 
|of which,
      market value of listed securities and shares of mutual funds |     | 52   |     | 643  |     | 1,311 | 
|                                                                             |     |      |     |      |     |       | 
|Cash
      and cash equivalents:                                             |     |      |     |      |     |       | 
|                                                                             |     |      |     |      |     |       | 
|Fixed-term
      deposits (maturity > 3 months)                              |     | 76   |     | 9    |     | 12    | 
|Fixed-term
      deposits (maturity < 3 months)                              |     | 93   |     | 59   |     | 123   | 
|Ordinary
      bank accounts                                                 | 643 |      | 727 |      | 560 |      
|                                                                             |     |      |     |      |     |       | 
|                                                                             | 812 |      | 795 |      | 695 |      
|                                                                             |     |      |     |      |     |       | 
|of which,
      restricted cash accounts                                     |     | 4    |     | 5    |     | 13    | 
|                                                                             |     |      |     |      |     |       | 

At December
  31, 2000, listed securities included for EUR 126 million and
  EUR 956 million, respectively, 12,500,000 shares in Diageo Plc
  (UK), and 18,465,940 shares in Bouygues SA (France). In 2001
  the Diageo shares were sold and the Bouygues shares were reclassified
  as unconsolidated investments (refer to Note 10).

As of December
  31, 2002, net cash and cash equivalents at year-end, as shown
  in the statement of cash flows, amount to EUR 544 million. The
  reconciliation of this amount with the data set out above is
  as follows:

|                                           |      |  
|------------------------------------------ | ---- | -
|(EUR
      millions)                       |      |  
|                                           |      |  
|                                           |      |  
|Unlisted
      short-term securities - net | 30   |  
|Cash
      and cash equivalents            | 812  |  
|Bank
      overdrafts                      | (298 | )
|                                           |      |  
|Cash
      and cash equivalents - net      | 544  |  
|                                           |      |  

F-19

---

5. TREASURY
  SHARES

The allocation
  of LVMH shares recorded as assets in the balance sheet at year-end
  is as follows:

|                                                            |            |  |      |   |       |   |       | 
|----------------------------------------------------------- | ---------- |  | ---- | - | ----- | - | ----- | 
|(EUR
      millions)                                        | 2002       |  | 2001 |   | 2000  |  
|                                                            |            |  |      |   |       |   |       | 
|                                                            | Number     |  | EUR  |   | EUR   |   | EUR   | 
|                                                            |            |  |      |   |       |   |       | 
|More
      than one year:                                   |            |  |      |   |       |   |       | 
|-
      stock option plans                                  |            |  |      |   |       |   |       | 
|gross
      amount                                          | 7,639,512  |  | 400  |   | 318   |   | 156   | 
|provision
      for loss in value                           |            |  | (38  | ) | -     |   | -     | 
|                                                            |            |  |      |   |       |   |       | 
|                                                            | 7,639,512  |  | 362  |   | 318   |   | 156   | 
|                                                            |            |  |      |   |       |   |       | 
|Less
      than one year:                                   |            |  |      |   |       |   |       | 
|-
      stock option plans                                  | 9,062,897  |  | 250  |   | 193   |   | 110   | 
|-
      stock price equalization or short-term investments: |            |  |      |   |       |   |       | 
|gross                                                       | 7,050,600  |  | 430  |   | 1,196 |   | 1,179 | 
|provision
      for loss in value                           | -          |  | (136 | ) | (343  | ) | -     | 
|                                                            |            |  |      |   |       |   |       | 
|                                                            | 16,113,497 |  | 544  |   | 1,046 |   | 1,289 | 

During the
  period, the following transactions occurred:

|                                            |                                   |   |                          |   |                        |   |                    |  
|------------------------------------------- | --------------------------------- | - | ------------------------ | - | ---------------------- | - | ------------------ | -
|                                            | Stock
      price equalization or |   | Stock
      option plans |  
|                                            | short-term
      investment       |   |                          |   |                        |  
|                                            |                                   |   |                          |   |                        |   |                    |  
|                                            | Number
      of shares            |   | EUR
      millions       |   | Number
      of shares |   | EUR
      millions |  
|                                            |                                   |   |                          |   |                        |   |                    |  
|As
      of January 1, 2002                 | 18,643,571                        |   | 854                      |   | 13,684,977             |   | 511                |  
|Purchases                                   | 3,280,228                         |   | 139                      |   | 3,292,660              |   | 148                |  
|Transfers                                   | 50,600                            |   | 3                        |   | (50,600                | ) | (3                 | )
|Options
      exercised                     | -                                 |   |                          |   | (224,628               | ) | (6                 | )
|Disposals
      at sale price               | (14,923,799                       | ) | (755                     | ) | -                      |   | -                  |  
|Gross
      capital gain or (loss) realized | -                                 |   | (154                     | ) | -                      |   | -                  |  
|Change
      in provisions                  | -                                 |   | 207                      |   | -                      |   | (38                | )
|                                            |                                   |   |                          |   |                        |   |                    |  
|As
      of December 31, 2002               | 7,050,600                         |   | 294                      |   | 16,702,409             |   | 612                |  
|                                            |                                   |   |                          |   |                        |   |                    |  

6. TRADE
  ACCOUNTS RECEIVABLE

|                                      |       |   |       |   |       |  
|------------------------------------- | ----- | - | ----- | - | ----- | -
|(EUR
      millions)                  | 2002  |   | 2001  |   | 2000  |  
|                                      |       |   |       |   |       |  
|Gross
      value                     | 1,457 |   | 1,636 |   | 1,708 |  
|Allowance
      for doubtful accounts | (130  | ) | (98   | ) | (70   | )
|                                      |       |   |       |   |       |  
|Net
      book value                  | 1,327 |   | 1,538 |   | 1,638 |  
|                                      |       |   |       |   |       |  

F-20

---

7.INVENTORIES
  AND WORK-IN-PROGRESS

|                                                           |       |   |       |   |       |  
|---------------------------------------------------------- | ----- | - | ----- | - | ----- | -
|(EUR
      millions)                                       | 2002  |   | 2001  |   | 2000  |  
|                                                           |       |   |       |   |       |  
|Merchandise                                                | 745   |   | 852   |   | 694   |  
|Finished
      goods                                       | 1,137 |   | 1,235 |   | 1,027 |  
|                                                           |       |   |       |   |       |  
|                                                           | 1,882 |   | 2,087 |   | 1,721 |  
|Wines
      and distilled alcohol in the process of ageing | 1,683 |   | 1,707 |   | 1,618 |  
|Other
      raw materials and work in progress             | 453   |   | 453   |   | 386   |  
|                                                           |       |   |       |   |       |  
|                                                           | 2,136 |   | 2,160 |   | 2,004 |  
|                                                           |       |   |       |   |       |  
|Gross
      value                                          | 4,018 |   | 4,247 |   | 3,725 |  
|                                                           |       |   |       |   |       |  
|Provision                                                  | (591  | ) | (592  | ) | (343  | )
|                                                           |       |   |       |   |       |  
|Net
      book value                                       | 3,427 |   | 3,655 |   | 3,382 |  
|                                                           |       |   |       |   |       |  

8. PREPAID
  EXPENSES AND OTHER CURRENT ASSETS

|                                          |       |  |       |  |       | 
|----------------------------------------- | ----- |  | ----- |  | ----- | 
|(EUR
      millions)                      | 2002  |  | 2001  |  | 2000  | 
|                                          |       |  |       |  |       | 
|Foreign
      currency hedging operations | 215   |  | 246   |  | 623   | 
|Tax: income
      tax                     | -     |  | 47    |  | -     | 
|other
      taxes                         | 243   |  | 243   |  | 207   | 
|Advances
      and downpayments           | 45    |  | 94    |  | 91    | 
|Prepaid
      expenses                    | 199   |  | 216   |  | 243   | 
|Other
      receivables, net              | 500   |  | 506   |  | 432   | 
|                                          |       |  |       |  |       | 
|                                          | 1,202 |  | 1,352 |  | 1,596 | 
|                                          |       |  |       |  |       | 

The "Foreign
  currency hedging operations" account is primarily composed of
  the unrealized gain on the revaluation of currency hedging contracts
  in force at year-end or, in the event of unrealized losses,
  in the corresponding prepaid expenses that were accrued for
  (Refer also to Note 15).

F-21

---

9. INVESTMENTS
  ACCOUNTED FOR USING THE EQUITY METHOD

|                                                                                 |      |   |      |   |      |  
|-------------------------------------------------------------------------------- | ---- | - | ---- | - | ---- | -
|(EUR
      millions)                                                             | 2002 |   | 2001 |   | 2000 |  
|                                                                                 |      |   |      |   |      |  
|Bonhams
      & Brooks PS&N Ltd (UK)                                             | 37   |   | 41   |   | -    |  
|De Beers
      LV Ltd (UK)                                                       | 9    |   | 16   |   | -    |  
|e-Luxury.com
      Inc (US)                                                      | -    |   | (**  | ) | (*   | )
|Millennium
      Import LLC (US) (***)                                           | 7    |   | -    |   | -    |  
|Other                                                                            | 15   |   | 20   |   | 21   |  
|                                                                                 |      |   |      |   |      |  
|Investments
      accounted for using the equity method                          | 68   |   | 77   |   | 21   |  
|                                                                                 |      |   |      |   |      |  
|                                                                                 |      |   |      |   |      |  
|(EUR
      millions)                                                             | 2002 |   | 2001 |   | 2000 |  
|                                                                                 |      |   |      |   |      |  
|Bonhams
      & Brooks PS&N Ltd                                                  | (4   | ) | -    |   | -    |  
|De Beers
      LV Ltd                                                            | (9   | ) | (4   | ) | -    |  
|e-Luxury.com
      Inc                                                           | -    |   | (31  | ) | (38  | )
|Millennium
      Import LLC (***)                                                | 2    |   | -    |   | -    |  
|Other                                                                            | (7   | ) | (7   | ) | 4    |  
|                                                                                 |      |   |      |   |      |  
|Income
      (loss) from investments accounted for using the equity
      method | (18  | ) | (42  | ) | (34  | )
|                                                                                 |      |   |      |   |      |  
|                                                                                 |      |   |      |   |      |  

|(*)   | Portion
      of the negative net equity transferred to a loss and contingency
      provision
|----- | ----------------------------------------------------------------------------------------------
|(**)  | Fully
      consolidated company as of December 31, 2001                                      
|(***) | Refer
      to Note 3: Changes in the scope of consolidation                                  

F-22

---

10.
  UNCONSOLIDATED INVESTMENTS AND OTHER INVESTMENTS

|                                                   |                   |   |            |   |                   |  |               |   |                   |   |            |  
|-------------------------------------------------- | ----------------- | - | ---------- | - | ----------------- |  | ------------- | - | ----------------- | - | ---------- | -
|                                                   | 2002              |   | 2001       |   | 2000              | 
|                                                   |                   |   |            |   |                   |  |               |   |                   |   |            |  
|(EUR
      millions)                               | Gross
      value |   | Provisions |   | Gross
      value |  | Provisions    |   | Gross
      value |   | Provisions |  
|                                                   |                   |   |            |   |                   |  |               |   |                   |   |            |  
|.
      Investment in Bouygues SA (France)         | 819               |   | (282       | ) | 819               |  | (82           | ) | -                 |   | -          |  
|                                                   |                   |   |            |   |                   |  |               |   |                   |   |            |  
|.
      Investment in Gucci Group NV (Netherlands) | -                 |   | -          |   | -                 |  | -             |   | 1,256             |   | -          |  
|                                                   |                   |   |            |   |                   |  |               |   |                   |   |            |  
|.
      Other investments                          | 460               |   | (128       | ) | 864               |  | (215          | ) | 754               |   | (118       | )
|                                                   |                   |   |            |   |                   |  |               |   |                   |   |            |  
|Unconsolidated
      investments and other         |                   |   |            |   |                   |  |               |   |                   |   |            |  
|investments                                        | 1,279             |   | (410       | ) | 1,683             |  | (297          | ) | 2,010             |   | (118       | )
|                                                   |                   |   |            |   |                   |  |               |   |                   |   |            |  
|                                                   |                   |   |            |   |                   |  |               |   |                   |   |            |  
|                                                   | Group             |   | Net        |   | Dividends         |  | Stockholders' |   | Net               |   | Market     |  
|                                                   | interest          |   | book       |   | received          |  | equity        |   | income            |   | value(2)   |  
|(EUR
      millions)                               |                   |   | value      |   |                   |  |               |   |                   |   |            |  
|                                                   |                   |   |            |   |                   |  |               |   |                   |   |            |  
|Bouygues
      SA (France)                         | 5                 | % | 537        |   | 6                 |  | 5,011         |   | 666               |   | 429        |  
|Tod's
      Spa (Italy)                            | 4                 | % | 47         |   | -                 |  | 391           |   | 36                |   | 36         |  
|Investments
      in various Internet funds (USA)  | N                 | D | 31         |   | -                 |  | NA            |   | NA                |   | -          |  
|SFMI
      SA Micromania (France)(1)               | 13                | % | 15         |   | -                 |  | 49            |   | -                 |   | -          |  
|Joseph
      SA (France)(1)                        | 10                | % | 7          |   | 1                 |  | 62            |   | -                 |   | -          |  
|Other
      investments                            | -                 |   | 48         |   | 1                 |  | -             |   | -                 |   | -          |  
|                                                   |                   |   |            |   |                   |  |               |   |                   |   |            |  
|Investments
      of less than 20%                 |                   |   | 685        |   | 8                 |  |               |   |                   |   |            |  
|                                                   |                   |   |            |   |                   |  |               |   |                   |   |            |  
|Pechel
      Industries SA (France)                | 43                | % | 33         |   | -                 |  | 97            |   | (2                | ) | -          |  
|L
      Capital FCPR (France)                      | 46                | % | 37         |   | -                 |  | 76            |   | (4                | ) | -          |  
|Interparfums
      Inc.(USA)                       | 21                | % | 17         |   | -                 |  | 77            |   | 10                |   | 29         |  
|Rossimoda
      Spa (Italy)(1)                     | 45                | % | 23         |   | -                 |  | 18            |   | 1                 |   | -          |  
|Sociedad
      Textil Lonia SA (Spain)(1)          | 25                | % | 9          |   | -                 |  | 15            |   | -                 |   | -          |  
|Other
      investments                            | -                 |   | 27         |   | -                 |  | -             |   | -                 |   | -          |  
|                                                   |                   |   |            |   |                   |  |               |   |                   |   |            |  
|Investments
      of between 20% and 50%           |                   |   | 146        |   | -                 |  |               |   |                   |   |            |  
|Other
      investments                            |                   |   | 38         |   | -                 |  |               |   |                   |   |            |  
|                                                   |                   |   |            |   |                   |  |               |   |                   |   |            |  
|                                                   |                   |   | 869        |   | 8                 |  |               |   |                   |   |            |  
|                                                   |                   |   |            |   |                   |  |               |   |                   |   |            |  

|(1) | The
      accounting data provided is prior to December 31, 2002,
      as the figures for the 2002 year-end were not available
      as of the date of preparation of this report.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Average
      stock market price for December 2002.                                                                                                                                

The investments
  listed above, which are more than 20%-owned, have not been accounted
  for under the equity method as the Group does not exercise significant
  influence over these companies or because they are not material
  to the Group operations.

Investment
  in Bouygues:

The LVMH
  group has an interest in Bouygues, managed as part of the Group's
  investment portfolio. During 2001, management determined that
  the prospects for a rise in the value of the investment must
  be assessed over the medium term; this interest, which, as of
  December 31, 2000, had been included in the short-term investment
  portfolio, was therefore reclassified as of June 30, 2001 to
  long-term investments (over one year), after deduction of the
  block of shares sold in July 2001 (2,650,000 shares).

As of December
  31, 2001, a provision was booked in respect of this investment
  for EUR 82 million; this provision was increased to EUR 282
  million at the end of 2002, in order to reflect the other than
  temporary drop in the market price of media and telecommunications
  stocks.

F-23

---

Investment
  in Gucci:

Between 1999
  and 2001 LVMH was involved in a dispute with the Pinault Printemps-Redoute
  (PPR) and Gucci groups; this dispute concerned the validity
  of two reserved capital increases that took place on February
  18, 1999 and March 19, 1999, and which led to a reduction in
  LVMHs stake in Gucci from 34.4% to approximately 20%.

In September
  2001, the PPR, Gucci and LVMH groups resolved this dispute through
  a settlement agreement providing for the following:

|- | PPR's
      purchase from LVMH in October 2001 of 8.6 million Gucci
      shares at 94 US dollars per share, fora
      total of 806 million US dollars (EUR 897 million);                                                          
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | the
      payment by Gucci in December 2001 of an exceptional dividend
      of 7 US dollars per share; givenLVMH's
      residual interest on that date, this resulted in earnings
      of 81 million US dollars (EUR 90 million);
|- | A
      takeover bid by PPR in March 2004 for all of Gucci stock
      at a price of 101.5 US dollars per share.                                                                                                                    

In December
  2001, LVMH sold its residual interest of 11.6 million shares
  to Crédit Lyonnais for 1,037 million US dollars (approximately
  89.6 US dollars per share), or EUR 1,150 million. The share
  sale agreement also contains an earn-out provision entitling
  LVMH, where applicable, to a price supplement until March 2004
  that depends on the price of Gucci shares and the dividends
  paid by Gucci during that period.

LVMH total
  capital gain on the sale of 20.1 million Gucci shares amounts
  to EUR 774 million, and EUR 864 million after taking into account
  the exceptional dividend.

Investment
  in Diageo:

In addition
  to the partnership regarding the distribution of their goods,
  LVMH and Diageo have maintained reciprocal capital investments
  for several years.

As of December
  31, 2002, Diageo thus held a 34% stake in Moët Hennessy,
  the holding company for the LVMH Wines and Spirits business
  group. LVMH's interest in Diageo (formerly Guinness), which
  was originally an interest of 20% in Guinness, has been gradually
  reduced since 1997. This investment, which was less than 0.5%
  as of December 31, 2000 and recorded in short-term investments,
  was sold in 2001.

F-24

---

11.
  GOODWILL AND SIMILAR INTANGIBLE ASSETS

|                                       |               |  | 2002  |  | 2001         |   | 2000  | 
|-------------------------------------- | ------------- |  | ----- |  | ------------ | - | ----- | 
|                                       |               |  |       |  |              |   |       | 
|                                       |               |  | Gross |  | Accumulated  |   | Gross | 
|                                       |               |  | value |  | amortization |   | value | 
|                                       | Amortization  |  |       |  | and          |   |       | 
|(EUR
      millions)                   | period        |  |       |  | provisions   |   |       | 
|                                       |               |  |       |  |              |   |       | 
|                                       |               |  |       |  |              |   |       | 
|DFS                                    | 20            |  | 1,996 |  | (675         | ) | 1,996 | 
|                                       |               |  |       |  |              |   |       | 
|Sephora                                | 5
      to 20 |  | 590   |  | (119         | ) | 587   | 
|                                       |               |  |       |  |              |   |       | 
|Louis
      Vuitton                    | 40            |  | 419   |  | (57          | ) | 419   | 
|                                       |               |  |       |  |              |   |       | 
|Fendi                                  | 20            |  | 351   |  | (28          | ) | 228   | 
|                                       |               |  |       |  |              |   |       | 
|Miami
      Cruiseline                 | 20            |  | 318   |  | (48          | ) | 378   | 
|                                       |               |  |       |  |              |   |       | 
|Veuve
      Clicquot Ponsardin         | 40            |  | 292   |  | (122         | ) | 292   | 
|                                       |               |  |       |  |              |   |       | 
|Donna
      Karan                      | 20            |  | 214   |  | (11          | ) | -     | 
|                                       |               |  |       |  |              |   |       | 
|Millennium                             | 15            |  | 68    |  | (2           | ) | -     | 
|                                       |               |  |       |  |              |   |       | 
|Laflachère                             | 25            |  | 65    |  | (10          | ) | 65    | 
|                                       |               |  |       |  |              |   |       | 
|La Samaritaine                         | 20            |  | 59    |  | (6           | ) | 57    | 
|                                       |               |  |       |  |              |   |       | 
|e-Luxury                               | 3             |  | 38    |  | (13          | ) | 45    | 
|                                       |               |  |       |  |              |   |       | 
|Phillips                               | -             |  | -     |  | -            |   | 123   | 
|                                       |               |  |       |  |              |   |       | 
|Other                                  |               |  | 524   |  | (238         | ) | 538   | 
|                                       |               |  |       |  |              |   |       | 
|subtotal                               |               |  | 4,934 |  | (1,329       | ) | 4,728 | 
|Goodwill
      under French regulation |               |  |       |  |              |   |       | 
|(Fonds
      de commerce)              |               |  | 68    |  | (42          | ) | 42    | 
|                                       |               |  |       |  |              |   |       | 
|                                       |               |  | 5,002 |  | (1,371       | ) | 4,770 | 
|                                       |               |  |       |  |              |   |       | 

- The goodwill
    from the Sephora subgroup includes the value of several selective
    retailing network names in the perfumes and cosmetics field:
    "Sephora", present in several European countries, as well
    as "Carmen", "Laguna" and "Boïdi" in Italy, and "Beauty
    Shop" (Marinopoulos Group) in Greece.
    Louis
      Vuittons goodwill is not representative of the price
      paid for acquiring the brand, since this was developed by
      the Group; it is the result of successive acquisitions of
      m inority interests in the different legal structures of
      the Louis Vuitton subgroup.
- Goodwill
    on DFS:Successive international crises (economic crisis
    in South East Asia, tragic events at the World Trade Center)
    since LVMH took control of DFS temporarily had serious impacts
    on the level of activity and results of DFS.Moreover, the economic situation in Japan, including
    the major changes occurring in this country and the unfavorable
    yen/dollar exchange rate, especially in 2001, have led to
    a lasting reduction in the number of Japanese tourists, DFS
    main clientele, as well as their purchasing power.In order to reflect the permanent fall in the
    level of business and profitability of DFS, and the greater
    volatility of its results in comparison with Group expectations
    at the time of its acquisition, the following adjustments
    were deemed necessary in 2001:

| | - | recognition of an exceptional amortization expense of EUR
      323 million, reducing the net book valueof
      goodwill to a level justified by discounted future cash
      flows;                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | - | reduction
      of the goodwill amortization period from 40 to 20 years.
      Thus the net adjusted book valueof
      EUR 1,415 million at December 31, 2001 will be amortized
      over the remaining 15 yearamortization
      period.

- The methods for valuing goodwill are the same as those described
    in Note 12 as regards brands.

F-25

---

12.
  BRANDS AND OTHER INTANGIBLE ASSETS

|                                  |  |                       |  |                                                           |       |                       |  |                                                           |       |                       |  |                                                           |      
|--------------------------------- |  | --------------------- |  | --------------------------------------------------------- | ----- | --------------------- |  | --------------------------------------------------------- | ----- | --------------------- |  | --------------------------------------------------------- | -----
|                                  |  | 2002                  |  | 2001                                                      |       | 2000                  | 
|                                  |  |                       |  |                                                           |       |                       |  |                                                           |       |                       |  |                                                           |      
|(EUR
      millions)              |  | **Gross
      value** |  | Accumulated
      amortization
      and
      provisions |       | **Gross
      value** |  | Accumulated
      amortization
      and
      provisions |       | **Gross
      value** |  | Accumulated
      amortization
      and
      provisions |      
|                                  |  |                       |  |                                                           |       |                       |  |                                                           |       |                       |  |                                                           |      
|Brands                            |  | 4,105                 |  | (90                                                       | )     | 4,138                 |  | (20                                                       | )     | 3,235                 |  | (4                                                        | )    
|including:                        |  |                       |  |                                                           |       |                       |  |                                                           |       |                       |  |                                                           |      
|-
      Tag Heuer                 |  | *854*                 |  | *-*                                                       |       | *837*                 |  | *-*                                                       |       | *823*                 |  | *-*                                                       |      
|-
      Fendi (1)                 |  | *809*                 |  | *(2*                                                      | *)*   | *809*                 |  | *-*                                                       |       | *404*                 |  | *-*                                                       |      
|-
      Donna Karan New York (1)  |  | *494*                 |  | *-*                                                       |       | *460*                 |  | *-*                                                       |       | *-*                   |  | *-*                                                       |      
|-
      Guerlain                  |  | *441*                 |  | *-*                                                       |       | *441*                 |  | *-*                                                       |       | *441*                 |  | *-*                                                       |      
|-
      Céline                    |  | *351*                 |  | *(70*                                                     | *)*   | *351*                 |  | *-*                                                       |       | *351*                 |  | *-*                                                       |      
|-
      Ebel                      |  | *125*                 |  | *-*                                                       |       | *123*                 |  | *-*                                                       |       | *125*                 |  | *-*                                                       |      
|-
      Loewe                     |  | *122*                 |  | *-*                                                       |       | *122*                 |  | *-*                                                       |       | *122*                 |  | *-*                                                       |      
|-
      Veuve Clicquot            |  | *113*                 |  | *-*                                                       |       | *113*                 |  | *-*                                                       |       | *113*                 |  | *-*                                                       |      
|-
      Château d'Yquem           |  | *108*                 |  | *-*                                                       |       | *108*                 |  | *-*                                                       |       | *108*                 |  | *-*                                                       |      
|-
      Krug                      |  | *100*                 |  | *-*                                                       |       | *100*                 |  | *-*                                                       |       | *100*                 |  | *-*                                                       |      
|-
      Other (< EUR 100 million) |  | *588*                 |  | *(18*                                                     | *)*   | *674*                 |  | *(20*                                                     | *)*   | *648*                 |  | *(4*                                                      | *)*  
|Leasehold rights                  |  | 139                   |  | (52                                                       | )     | 157                   |  | (64                                                       | )     | 121                   |  | (34                                                       | )    
|Software                          |  | 152                   |  | (111                                                      | )     | 156                   |  | (103                                                      | )     | 123                   |  | (66                                                       | )    
|Other                             |  | 150                   |  | (94                                                       | )     | 136                   |  | (92                                                       | )     | 115                   |  | (75                                                       | )    
|                                  |  |                       |  |                                                           |       |                       |  |                                                           |       |                       |  |                                                           |      
|                                  |  | **4,546**             |  | **(347**                                                  | **)** | **4,587**             |  | **(279**                                                  | **)** | **3,594**             |  | **(179**                                                  | **)**
|                                  |  |                       |  |                                                           |       |                       |  |                                                           |       |                       |  |                                                           |      

|(1) | Refer
      to Note 3: Changes in the scope of consolidation.
|--- | -------------------------------------------------------------

| | The
      "acquired" brands included in the "Others" line above are
      primarily:
|- | ------------------------------------------------------------------------------------
|  |                                                                                     

| | - | Wines and Spirits: Canard-Duchêne, Newton Vineyards,
      MountAdam;                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------
| | - | Fashion and Leather Goods: Givenchy, Kenzo, Christian Lacroix,
      Berluti, Thomas Pink and Pucci;                                             
| | - | Perfumes and Cosmetics: Parfums Christian Dior, Parfums
      Givenchy, Parfums Kenzo, Bliss, Makeup
      for Ever, BeneFit Cosmetics and Fresh;
| | - | Watches and Jewelry: Zenith, Fred, Chaumet and Omas;                                                                                             
| | - | Other Activities: La Tribune newspaper and Investir magazine.                                                                                    
| |   |                                                                                                                                                  

| | Brands
      developed by the Group, particularly Louis Vuitton and Hennessy,
      Moët et Chandon, Dom Pérignon, Mercier and Ruinart
      champagnes, are not capitalized in the balance sheet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | Brand
      values are determined mainly by the cash flow method, i.e.
      on the basis of the future cash flows expected to be generated
      by the brand. However, other methods are used which may
      lead to an adjustment of the results obtained by using the
      cash flow method: the royalty method, which gives the brand
      a value equivalent to the royalties that must be paid for
      the right to use such a brand; the margin differential method,
      applicable only in cases where the difference in revenues
      generated by branded products and unbranded products can
      be measured; the method based on calculating the costs required
      to build up an equivalent brand, in particular in terms
      of advertising expenses; and finally the market comparables
      method, using revenue and earnings multiples used in transactions
      with similar brands, or stock market multiples applicable
      to the businesses in question.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  | In the
      cash flow method, the pro forma data used is based on budgets
      and plans drawn up by the management of the companies exploiting
      these brands; the expected future cash flows based on these
      documents are discounted to present value, and, where necessary,
      weighted according to the probability that each of the scenarios
      applied will occur. The discount rate used includes the
      rate of return expected by an investor in the business sector
      concerned, and the risk premium inherent to this business.                                                                                                                                                                                                                                                                                                                                                                                                                               
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  | Identical
      methods are used to value goodwill.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

F-26

---

13.
  PROPERTY, PLANT AND EQUIPMENT

|                                                                  |       |  |              |   |       |   |              |   |       |  |              |  
|----------------------------------------------------------------- | ----- |  | ------------ | - | ----- | - | ------------ | - | ----- |  | ------------ | -
|                                                                  | 2002  |  | 2001         |   | 2000  |  
|                                                                  |       |  |              |   |       |   |              |   |       |  |              |  
|                                                                  | Gross |  | Accumulated  |   | Gross |   | Accumulated  |   | Gross |  | Accumulated  |  
|(EUR
      millions)                                              | value |  | depreciation |   | value |   | depreciation |   | value |  | depreciation |  
|                                                                  |       |  |              |   |       |   |              |   |       |  |              |  
|Land                                                              | 837   |  | (8           | ) | 909   |   | (5           | ) | 581   |  | (5           | )
|Vineyard
      land and producing vineyards                       | 419   |  | (54          | ) | 423   |   | (56          | ) | 406   |  | (48          | )
|Buildings                                                         | 1,904 |  | (681         | ) | 2,041 |   | (694         | ) | 1,703 |  | (563         | )
|Machinery
      and equipment                                     | 1,410 |  | (966         | ) | 1,569 |   | (989         | ) | 1,329 |  | (893         | )
|Other
      tangible assets                                       | 1,811 |  | (822         | ) | 1,687 |   | (677         | ) | 1,340 |  | (483         | )
|                                                                  |       |  |              |   |       |   |              |   |       |  |              |  
|                                                                  | 6,381 |  | (2,531       | ) | 6,629 |   | (2,421       | ) | 5,359 |  | (1,992       | )
|                                                                  |       |  |              |   |       |   |              |   |       |  |              |  
|Of
      which, assets acquired or financed under capital leases: |       |  |              |   |       |   |              |  
|                                                                  | 2002  |  | 2001         |   | 2000  |  
|                                                                  |       |  |              |   |       |   |              |   |       |  |              |  
|                                                                  | Gross |  | Accumulated  |   | Gross |   | Accumulated  |   | Gross |  | Accumulated  |  
|(EUR
      millions)                                              | value |  | depreciation |   | value |   | depreciation |   | value |  | depreciation |  
|                                                                  |       |  |              |   |       |   |              |   |       |  |              |  
|Land                                                              | 23    |  | -            |   | 2     | 5 | -            |   | 18    |  | -            |  
|Buildings                                                         | 257   |  | (75          | ) | 278   |   | (69          | ) | 253   |  | (61          | )
|Machinery
      and equipment                                     | 33    |  | (24          | ) | 36    |   | (22          | ) | 32    |  | (17          | )
|Fixed
      assets in progress                                    | 2     |  | -            |   | 1     |   | -            |   | 2     |  | -            |  
|                                                                  |       |  |              |   |       |   |              |   |       |  |              |  
|                                                                  | 315   |  | (99          | ) | 340   |   | (91          | ) | 305   |  | (78          | )
|                                                                  |       |  |              |   |       |   |              |   |       |  |              |  

Total capital
  lease obligations amount to EUR 133 million at December 31,
  2002 (EUR 163 million and 149 million at December 31, 2001 and
  2000 respectively), of which EUR 14 million are short-term (EUR
  10 million and EUR 11 million at December 31, 2001 and 2000
  respectively).

Changes in
  property, plant and equipment between the periods presented
  are as follows:

|                                                                 |       |   |              |   |           |   |              |   |       |   |              |  
|---------------------------------------------------------------- | ----- | - | ------------ | - | --------- | - | ------------ | - | ----- | - | ------------ | -
|                                                                 | 2002  |   |              |   | 2001      |   |              |   | 2000  |   |              |  
|                                                                 |       |   |              |   |           |   |              |   |       |   |              |  
|                                                                 | Gross |   | Accumulated  |   | Gross     |   | Accumulated  |   | Gross |   | Accumulated  |  
|(EUR
      millions)                                             | value |   | depreciation |   | value     |   | depreciation |   | value |   | depreciation |  
|                                                                 |       |   |              |   |           |   |              |   |       |   |              |  
|Balance at begining
      of year                                | 6,629 |   | (2,421       | ) | 5,359     |   | (1,992       | ) | 4,540 |   | (1,684       | )
|Acquisitions                                                     | 461   |   | -            |   | 900       |   | -            |   | 758   |   | -            |  
|Disposals and retirements                                        | (412  | ) | 244          |   | (261      | ) | 167          |   | (173  | ) | 121          |  
|Depreciation allowance                                           | -     |   | (398         | ) | -         |   | (516         | ) | -     |   | (350         | )
|Impact of changes
      in consolidation scope                   | 128   |   | (125         | ) | 582       |   | (61          | ) | 158   |   | (53          | )
|Impact of exchange
      rate fluctuations                       | (425  | ) | 169          |   | 49        |   | (19          | ) | 76    |   | (26          | )
|                                                                 |       |   |              |   |           |   |              |   |       |   |              |  
|Balance at year-end                                              | 6,381 |   | (2,531)      |   | 6,629     |   | (2,421)      |   | 5,359 |   | (1,992)      |  
|                                                                 |       |   |              |   |           |   |              |   |       |   |              |  
|including assets
      acquired or financed under capital leases | 3     |   | -            |   | 1
      6 |   | -            |   | 7     |   | -            |  
|                                                                 |       |   |              |   |           |   |              |   |       |   |              |  

- In 2002:
    the increase for the period resulted primarily from the investments
    in the Louis Vuitton distribution networks, particularly in
    Japan, and from a policy to revamp stores or corners in department
    stores.

F-27

---

> The main
>     assets sold over the period included real estate located in
>     Paris, in particular the former Groups head office,
>     premises of stores on the Champs Elysées, as well as
>     certain Pommery assets. This account also included the impact
>     of the closure of various stores, in particular DFS or Sephora
>     Japan stores.
>   The main
>     exchange rate impacts were mainly attributable to the fluctuations
>     of the US dollar.

- In 2000
    and 2001: the acquisitions of the period consisted mainly
    of investments in the Louis Vuitton, DFS and Sephora distribution
    networks.
    EUR 471
      million of the impact of the change in the scope of consolidation
      in 2001 (including EUR 245 million of land and EUR 225 million
      of buildings) resulted from the consolidation of La Samaritaine.

14.
  SHORT-TERM BORROWINGS

The
  breakdown of other short-term borrowings by nature and currency
  is as follows:

|                         |       |  |       |  |       |  |                      |        |  |       | 
|------------------------ | ----- |  | ----- |  | ----- |  | -------------------- | ------ |  | ----- | 
|                         |       |  |       |  |       |  |                      | Before |  | After | 
|(EUR
      millions)     | 2002  |  | 2001  |  | 2000  |  |                      | swaps  |  | swaps | 
|                         |       |  |       |  |       |  |                      |        |  |       | 
|Commercial
      paper   | 1,447 |  | 2,837 |  | 3,670 |  | Euro                 | 1,872  |  | 85    | 
|                         |       |  |       |  |       |  |                      |        |  |       | 
|Other
      credit lines | 559   |  | 570   |  | 1,359 |  | Yen                  | 260    |  | 227   | 
|                         |       |  |       |  |       |  |                      |        |  |       | 
|Bank
      overdrafts    | 298   |  | 358   |  | 304   |  | US
      Dollar      | 11     |  | 835   | 
|                         |       |  |       |  |       |  | Pound
      Sterling | 1      |  | 107   | 
|                         |       |  |       |  |       |  | Swiss
      Franc    | -      |  | 881   | 
|                         |       |  |       |  |       |  | Other                | 160    |  | 169   | 
|                         |       |  |       |  |       |  |                      |        |  |       | 
|                         | 2,304 |  | 3,765 |  | 5,333 |  |                      | 2,304  |  | 2,304 | 
|                         |       |  |       |  |       |  |                      |        |  |       | 

As of December
  31, 2002, the unused, confirmed short-term credit lines totaled
  approximately EUR 1.9 billion.

The weighted
  average interest rate of the short-term borrowings (before SWAP
  effects) is estimated approximately at 3.1% for the year ended
  December 31, 2002 (4.13% and 4.63% for the years ended December
  31, 2001 and 2000 respectively).

F-28

---

15.
  OTHER CURRENT LIABILITIES

|                                                        |       |  |       |  |       | 
|------------------------------------------------------- | ----- |  | ----- |  | ----- | 
|(EUR
      millions)                                    | 2002  |  | 2001  |  | 2000  | 
|                                                        |       |  |       |  |       | 
|Foreign
      currency hedging operations               | 247   |  | 276   |  | 388   | 
|Personnel
      and payroll expenses                    | 377   |  | 358   |  | 362   | 
|Taxes
      other than income tax                       | 181   |  | 194   |  | 201   | 
|Advances
      and downpayments received from customers | 119   |  | 116   |  | 116   | 
|Deferred
      payments on fixed assets                 |       |  |       |  |       | 
|or
      long-term investments                          | 156   |  | 235   |  | 70    | 
|Provisions
      for reorganization                     | 108   |  | 171   |  | 154   | 
|Other
      loss and contingency provisions             | 284   |  | 200   |  | 170   | 
|Provisions
      for returned goods                     | 97    |  | 116   |  | 119   | 
|Prepaid
      income                                    | 45    |  | 20    |  | 72    | 
|Other                                                   | 919   |  | 936   |  | 719   | 
|                                                        |       |  |       |  |       | 
|                                                        | 2,533 |  | 2,622 |  | 2,371 | 
|                                                        |       |  |       |  |       | 

The "Foreign
  currency hedging operations" account is primarily composed of
  the unrealized loss on the revaluation of the currency hedging
  contracts in force at year-end or, in the event of an unrealized
  gain, of the prepaid income that was accrued for (refer also
  to Note 8).

During the
  2002 fiscal period, the changes in the balances of the provision
  for reorganization and the loss and contingency provisions and
  for returned goods are as follows:

|                                                            |                                        |                         |     |            |      |                    |     |                        |     |                                             |    |                                                             |     |                         | 
|----------------------------------------------------------- | -------------------------------------- | ----------------------- | --- | ---------- | ---- | ------------------ | --- | ---------------------- | --- | ------------------------------------------- | -- | ----------------------------------------------------------- | --- | ----------------------- | 
|                                                            |                                        | December
      31, 2001 |     | Provisions |      | Amounts
      used |     | Amounts
      released |     | Changes
      in the scope of consolidation |    | Other
      (including cumulated translation adjustements.) |     | December
      31, 2002 | 
|                                                            |                                        |                         |     |            |      |                    |     |                        |     |                                             |    |                                                             |     |                         | 
|Provisions
      for reorganization                         | 171                                    |                         | 49  |            | (129 | )                  | (15 | )                      | 17  |                                             | 15 |                                                             | 108 |                        
|Loss
      and contingency provisions                       | 200                                    |                         | 107 |            | (140 | )                  | (13 | )                      | 129 |                                             | 1  |                                                             | 284 |                        
|Provisions
      for returned goods                         | 116                                    |                         | 87  |            | (100 | )                  | (1  | )                      | 1   |                                             | (6 | )                                                           | 97  |                        
|                                                            |                                        |                         |     |            |      |                    |     |                        |     |                                             |    |                                                             |     |                         | 
|Total                                                       |                                        | 487                     |     | 243        |      | (369               | )   | (29                    | )   | 147                                         |    | 10                                                          |     | 489                     | 
|                                                            |                                        |                         |     |            |      |                    |     |                        |     |                                             |    |                                                             |     |                         | 
|of
      which:income from
                      operations | -                                      |                         | 149 |            | NA   |                    | (11 | )                      | -   |                                             | -  |                                                             | -   |                        
|                                                            | financial
      expense (income) - net | -                       |     | 11         |      | NA                 |     | (4                     | )   | -                                           |    | -                                                           |     | -                       | 
|                                                            | other
      income and expenses        | -                       |     | 83         |      | NA                 |     | (14                    | )   | -                                           |    | -                                                           |     | -                       | 

F-29

---

16.
  LONG-TERM DEBT

16.1
  Breakdown by nature

|                                                               |                     |                          |                    |  |       |   |       |   |       |  
|-------------------------------------------------------------- | ------------------- | ------------------------ | ------------------ |  | ----- | - | ----- | - | ----- | -
|(EUR millions)                                                 | Interest
      rate | Floating
      rate swap | Maturity           |  | 2002  |   | 2001  |   | 2000  |  
|                                                               |                     |                          |                    |  |       |   |       |   |       |  
|Bonds/public issues                                            |                     |                          |                    |  |       |   |       |   |       |  
|                                                               |                     |                          |                    |  |       |   |       |   |       |  
|EUR 850 000 000, 2001 (1)                                      | 5.375%              | partial                  | 2004               |  | 850   |   | 850   |   | -     |  
|EUR 500 000 000, 2001                                          | 6.125%              | total                    | 2008               |  | 500   |   | 500   |   | -     |  
|EUR 600 000 000, 2000 (2)                                      | 5.75%               | total                    | 2005               |  | 600   |   | 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   |  
|FRF 1 300 000 761, 1998 indexed
      (4)                      | 1.00%               | total                    | 2005               |  | 71    |   | 198   |   | 198   |  
|FRF 1 500 000 000, 1996                                        | 5.25%               | total                    | 2002               |  | -     |   | 229   |   | 229   |  
|                                                               |                     |                          |                    |  |       |   |       |   |       |  
|                                                               |                     |                          |                    |  | 2,821 |   | 3,177 |   | 1,977 |  
|                                                               |                     |                          |                    |  |       |   |       |   |       |  
|Bonds/private
      placement (Euro Medium Term Notes program) |                     |                          |                    |  |       |   |       |   |      
|                                                               |                     |                          |                    |  |       |   |       |   |       |  
|EUR 8 000 000, 2002                                            | 0.00%               | total                    | 2004               |  | 8     |   | -     |   | -     |  
|EUR 50 000 000, 2002                                           | floating
      rate | total                    | 2004               |  | 50    |   | -     |   | -     |  
|JPY 3 000 000 000, 2002                                        | floating
      rate | -                        | 2004               |  | 24    |   | -     |   | -     |  
|JPY 500 000 000, 2002                                          | 0.66%               | -                        | 2004               |  | 4     |   | -     |   | -     |  
|EUR 130 000 000, 2001                                          | floating
      rate | -                        | 2003               |  | 130   |   | 130   |   | -     |  
|EUR 150 000 000, 2001                                          | floating
      rate | -                        | 2002               |  | -     |   | 150   |   | -     |  
|SGD 125 000 000, 2001                                          | 4.00%               | total                    | 2006               |  | 66    |   | 79    |   | -     |  
|EUR 55 000 000, 2001                                           | floating
      rate | -                        | 2006               |  | 55    |   | 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
      rate | -                        | 2002               |  | -     |   | 20    |   | -     |  
|JPY 2 000 000 000, 2001                                        | 0.65%               | total                    | 2004               |  | 19    |   | 19    |   | -     |  
|JPY 1 500 000 000, 2001                                        | 0.95%               | total                    | 2006               |  | 14    |   | 14    |   | -     |  
|JPY 1 500 000 000, 2001                                        | 0.21%               | total                    | 2002               |  | -     |   | 14    |   | -     |  
|JPY 1 100 000 000, 2001                                        | floating
      rate | total                    | 2006               |  | 10    |   | 10    |   | -     |  
|JPY 1 000 000 000, 2001                                        | floating
      rate | total                    | 2006               |  | 9     |   | 9     |   | -     |  
|EUR 120 000 000, 2000                                          | floating
      rate | -                        | 2002               |  | -     |   | 120   |   | 120   |  
|SGD 100 000 000, 2000                                          | 3.55%               | total                    | 2001               |  | -     |   | -     |   | 64    |  
|EUR 60 000 000, 2000                                           | floating
      rate | -                        | 2001               |  | -     |   | -     |   | 60    |  
|EUR 40 000 000, 2000                                           | floating
      rate | -                        | 2004               |  | 40    |   | 40    |   | 40    |  
|EUR 30 000 000, 2000                                           | floating
      rate | -                        | 2005               |  | 30    |   | 30    |   | 30    |  
|EUR 25 000 000, 2000                                           | floating
      rate | -                        | 2002               |  | -     |   | 25    |   | 25    |  
|EUR 18 500 000, 2000                                           | floating
      rate | -                        | 2001               |  | -     |   | -     |   | 19    |  
|HKD 100 000 000, 2000                                          | floating
      rate | total                    | 2003               |  | 15    |   | 15    |   | 15    |  
|                                                               |                     |                          |                    |  |       |   |       |   |       |  
|                                                               |                     |                          |                    |  | 474   |   | 777   |   | 373   |  
|Long-term capital leases
      and rentals                     |                     |                          | 2003
      to 2008 |  | 144   |   | 178   |   | 166   |  
|Other financial debts                                          |                     |                          | 2003
      to 2008 |  | 1,389 |   | 1,508 |   | 1,217 |  
|                                                               |                     |                          |                    |  |       |   |       |   |       |  
|Total                                                          |                     |                          |                    |  | 4,828 |   | 5,640 |   | 3,733 |  
|Less current portion (5)                                       |                     |                          |                    |  | (274  | ) | (238  | ) | (235  | )
|                                                               |                     |                          |                    |  |       |   |       |   |       |  
|Portion in excess of one year                                  |                     |                          |                    |  | 4,554 |   | 5,402 |   | 3,498 |  
|                                                               |                     |                          |                    |  |       |   |       |   |       |  

Unless otherwise
  indicated, bonds are redeemable at par upon maturity.

F-30

---

|(1) | 2001 bond of EUR
      850 million, bearing interest at the rate of 5.375%, issued
      as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(2) | 2000 bond of EUR
      600 million bearing interest at the rate of 5.75%, issued
      as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(3) | 1999 bond of EUR
      800 million, bearing interest at the rate of 5.00%, issued
      as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(4) | Indexed
      bond issued in 1998 for FRF 1,300,000,761 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. In this
      regard, LVMH repaid a total principal amount of EUR 127
      million during 2002; the related swaps converting it into
      a non-indexed, floating rate debt, have accordingly been
      cancelled.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(5) | As
      of December 31, 2002, unused long-term irrevocable credit
      lines exceeded EUR 1.8 billion. Due to these commitments,
      a fraction of the current portion of long-term debt was
      maintained under long-term debt, representing EUR 130 million.In addition, due to the existence
      of renewal authorizations, short-term debt part of long
      term irrevocable credit line was reclassified under long-term
      debt, representing EUR 573 million (EUR 579 million as of
      December 31, 2001; EUR 272 million as of December 31, 2000).                                               

Upon issuance,
  all bonds denominated in foreign currencies gave rise to swap
  contracts converting these bonds into Euro-denominated debt,
  with the exception of the bond for SGD 125,000,000, which was
  converted into US dollars-denominated debt. These swaps upon
  issuance were supplemented by interest rate hedging transactions
  at a later date (refer to Note 16.2).

The market
  value of the bonds, calculated on the basis of the interest
  rates provided for in the issuance contracts, amounted to EUR
  3,530 million as of December 31, 2002, for a face value of EUR
  3,446 million; taking into account the hedging transactions
  that were subsequently entered into - and which remain in force
  at year-end -, the market value of these bonds amounts to EUR
  3,381 million.

F-31

---

16.2
  Breakdown by maturity date and currency

|(EUR
      millions)      |       |  |                        |                   |  |                  | 
|------------------------- | ----- |  | ---------------------- | ----------------- |  | ---------------- | 
|                          |       |  |                        |                   |  |                  | 
|Maturity                  |       |  | Currency               | Before
      swap |  | After
      swap | 
|                          |       |  |                        |                   |  |                  | 
|2003                      | 274   |  | Euro                   | 4,050             |  | 4,160            | 
|2004                      | 1,696 |  | Yen                    | 167               |  | 115              | 
|2005                      | 937   |  | US
      Dollar        | 401               |  | 467              | 
|2006                      | 1,038 |  | Swiss
      Franc      | 5                 |  | 5                | 
|2007                      | 249   |  | Singapore
      Dollar | 66                |  | -                | 
|2008
      and thereafter | 634   |  | Hong
      Kong Dollar | 106               |  | 59               | 
|                          |       |  | Other                  | 33                |  | 22               | 
|                          |       |  |                        |                   |  |                  | 
|                          | 4,828 |  |                        | 4,828             |  | 4,828            | 
|                          |       |  |                        |                   |  |                  | 

As of December
  31, 2002, after taking into account the swap contracts in force
  at said date, 51 % of the debt shown above is stated at a fixed
  rate or a floating rate capped, and the remaining 49 % of the
  debt is at a floating rate.

17.
  OTHER LONG-TERM LIABILITIES

|                                                                         |       |  |       |  |       | 
|------------------------------------------------------------------------ | ----- |  | ----- |  | ----- | 
|(EUR
      millions)                                                     | 2002  |  | 2001  |  | 2000  | 
|                                                                         |       |  |       |  |       | 
|Provisions
      for pensions, medical costs and similar commitments (1) | 177   |  | 256   |  | 217   | 
|Loss
      and contingency provisions                                    | 480   |  | 548   |  | 658   | 
|Provisions
      for reorganization                                      | 80    |  | 160   |  | 64    | 
|Provisions
      for employee profit-sharing plans (2)                   | 51    |  | 49    |  | 57    | 
|Deferred
      payments on financial investments                         | 182   |  | 114   |  | 49    | 
|Other
      liabilities                                                  | 103   |  | 123   |  | 119   | 
|                                                                         |       |  |       |  |       | 
|                                                                         | 1,073 |  | 1,250 |  | 1,164 | 
|                                                                         |       |  |       |  |       | 

|(1) | As
      of December 31, 2002, plan assets intended to fund commitments
      were deducted from such commitments; as of December 31,
      2001 and 2000, plan assets recorded under balance sheet
      assets amounted to EUR 81 million and EUR 72 million, respectively.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | French
      companies only.                                                                                                                                                                                                                                                 

- Provisions
    for pensions, medical costs and similar commitments are discussed
    in Note 32.
- The
    loss and contingency provisions correspond to the estimate
    of the impact on assets and liabilities of risks, disputes,
    or actual or potential situations giving rise to litigation
    arising from the Group's activities; such activities are carried
    out worldwide, within what is often an imprecise vague regulatory
    framework that is different for each country and changes over
    time, and applies to areas as diverse as the composition of
    the products or the calculation of taxes.

F-32

---

During the
  2002 fiscal period, the changes in loss and contingency provisions,
  provisions for reorganization are as follows:

|                                            |                   |  |            |  |              |   |                  |   |                                   |   |                                                  |   |                   | 
|------------------------------------------- | ----------------- |  | ---------- |  | ------------ | - | ---------------- | - | --------------------------------- | - | ------------------------------------------------ | - | ----------------- | 
|                                            | December 31, 2001 |  | Provisions |  | Amounts used |   | Amounts released |   | Changes in scope of consolidation |   | Other (including translation
      adjustements) |   | December 31, 2002 | 
|                                            |                   |  |            |  |              |   |                  |   |                                   |   |                                                  |   |                   | 
|Loss and contingency
      provisions       | 548               |  | 83         |  | (82          | ) | (17              | ) | (22                               | ) | (30                                              | ) | 480               | 
|                                            |                   |  |            |  |              |   |                  |   |                                   |   |                                                  |   |                   | 
|Provisions for reorganization               | 160               |  | 17         |  | (44          | ) | (5               | ) | (6                                | ) | (42                                              | ) | 80                | 
|                                            |                   |  |            |  |              |   |                  |   |                                   |   |                                                  |   |                   | 
|Total                                       | 708               |  | 100        |  | (126         | ) | (22              | ) | (28                               | ) | (72                                              | ) | 560               | 
|                                            |                   |  |            |  |              |   |                  |   |                                   |   |                                                  |   |                   | 
|including: income
      from operations     | -                 |  | 18         |  | NA           |   | (6               | ) | -                                 |   | -                                                |   | -                 | 
|                                            |                   |  |            |  |              |   |                  |   |                                   |   |                                                  |   |                   | 
|other
      income and
            expenses | -                 |  | 82         |  | NA           |   | (16              | ) | -                                 |   | -                                                |   | -                 | 
|                                            |                   |  |            |  |              |   |                  |   |                                   |   |                                                  |   |                   | 

18.
  REPACKAGED NOTES

|Issuance dates           |      |  | December
      1990   |  | February
      1992 | 
|------------------------ | ---- |  | --------------------- |  | ------------------- | 
|                         |      |  |                       |  |                     | 
|                         |      |  |                       |  |                     | 
|Par value (EUR millions) |      |  | 762                   |  | 229                 | 
|                         |      |  |                       |  |                     | 
|Issuance price           |      |  | At
      par value    |  | At
      par value  | 
|                         |      |  |                       |  |                     | 
|Stated interest rate     |      |  | 6
      month EURIBOR |  | 9.70
      %        | 
|                         |      |  | +
      0.45%         |  |                     | 
|                         |      |  |                       |  |                     | 
|                         |      |  |                       |  |                     | 
|Balance at December 31   | 2002 |  | 147                   |  | 75                  | 
|                         |      |  |                       |  |                     | 
|(EUR millions)           | 2001 |  | 195                   |  | 89                  | 
|                         |      |  |                       |  |                     | 
|                         | 2000 |  | 245                   |  | 101                 | 

In 1990 and
  1992, LVMH issued, outside France, two series of subordinated
  notes ("repackaged subordinated notes"), with 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 of deferring
      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 under long-term debt
  as repackaged notes. The repackaged subordinated notes issued
  in 1992 were simultaneously reclassified as a result of the
  pari-passu clause in the applicable agreement.

Although
  there are no fixed repayment terms, the repackaged notes are
  recorded on the consolidated balance sheet for an amount that
  will be progressively reduced to zero at the end of a fifteen-year
  period, arising from agreements entered into with third parties.

In accordance
  with these agreements and in return for a final lump sum payment
  by LVMH upon issuance, 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.

F-33

---

|According
      to these arrangements:
|--------------------------------------
|                                      
|-                                     
|                                      
|-                                     

The 1990
  repackaged notes, issued at a floating rate, have been swapped
  for a fixed rate for an amount of EUR 469 million.

The market
  value of these repackaged notes as of December 31, 2002 is EUR
  154 million based on the interest rates provided for in the
  issuance contracts, and EUR 266 million if the related interest
  rate hedging contracts in force at year-end are also taken into
  account.

19.
  MINORITY INTERESTS

|                                                          |                             |       |      |       |     |       | 
|--------------------------------------------------------- | --------------------------- | ----- | ---- | ----- | --- | ----- | 
|(EUR
      millions)                                      |                             | 2002  |      | 2001  |     | 2000  | 
|                                                          |                             |       |      |       |     |       | 
|As
      of January 1                                     |                             | 1,800 |      | 1,481 |     | 1,077 | 
|-
      dividends paid to minority interests              | (23                         | )     | (171 | )     | (70 | )    
|-
      minority interests in income before unusual items | 131                         |       | 99   |       | 179 |      
|-
      minority interests in unusual items               | -                           |       | (9   | )     | 62  |      
|-
      impact of changes in the scope of consolidation:  |                             |       |      |       |     |      
|.
      Consolidation of:                                 | Fendi (1)                   | (138  | )    | 184   |     | 183   | 
|                                                          | La
      Samaritaine        | (2    | )    | 150   |     | -     | 
|                                                          | Pury
      & Luxembourg Art | -     |      | 43    |     | -     | 
|                                                          | Donna
      Karan           | 49    |      | -     |     | -     | 
|.
      Acquisition of minority interests in Thomas Pink  | (21                         | )     | -    |       | -   |      
|.
      Other changes in the scope of consolidation       | 16                          |       | 9    |       | 41  |      
|-
      foreign currency translation adjustment           | (40                         | )     | 14   |       | 9   |      
|                                                          |                             |       |      |       |     |       | 
|As
      of December 31                                   |                             | 1,772 |      | 1,800 |     | 1,481 | 
|                                                          |                             |       |      |       |     |       | 

|(1) | The Group interest
      was 25.5% in 2000, within the scope of the proportional
      consolidation of 50% of Fendi; 51% in 2001 (fully consolidated),
      with a gradual acquisition of certain minority interests
      in 2002.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Refer to Note 3:
      Changes in the scope of consolidation                                                                                                                                                                         

20.
  STOCKHOLDERS' EQUITY

20.1
  Common stock

As of December
  31, 2002, there were 489,937,410 shares issued and outstanding
  with a par value of 0.3 euro (489,901,115 in 2001; 489,858,345
  in 2000), including 277,930,805 with double voting rights. Double
  voting rights are granted to registered shares held for at least
  three years.

The change
  in the number of shares during the period is due to the exercise
  of stock options.

The authorized
  share capital as of December 31, 2002 totaled 611,643,542 shares.

F-34

---

The average
  number of common shares for the 2002 fiscal period was 488,852,554
  (488,064,659 in 2001; 484,800,930 in 2000) and remains the same
  after dilution (488,072,374 in 2001; 484,886,474 in 2000).

In accordance
  with French law, dividends may only be taken from the parent
  company income for the current year and statutory retained earnings
  available for distribution. As of December 31, 2002 the amount
  available for distribution totaled EUR 326 million, excluding
  the proposed dividends for EUR 392 million, free of the distribution
  tax (précompte
  mobilier).

20.2
  Cumulative translation adjustments

The breakdown
  by currency of the cumulative translation adjustments recorded
  in stockholders' equity is as follows:

|                       |  |                     |  
|---------------------- |  | ------------------- | -
|(EUR
      millions)   |  | AtDecember 31, 2002 |  
|                       |  |                     |  
|US Dollar              |  | (157                | )
|Hong
      Kong Dollar |  | (43                 | )
|Yen                    |  | (12                 | )
|Argentine
      Peso   |  | (42                 | )
|Swiss
      Franc      |  | 96                  |  
|Euro                   |  | (39                 | )
|Other                  |  | (25                 | )
|                       |  |                     |  
|Total                  |  | (222                | )
|                       |  |                     |  

The cumulative
  translation adjustments due to Euro stems from the translation
  adjustments of the reserves of European companies, calculated
  as of January 1, 1999 when they were converted into Euro.

20.3
  Restricted retained earnings

The parent
  company of the Group, LVMH Moët Hennessy Louis Vuitton
  SA, has restricted retained earnings of EUR 59 million at December
  31, 2002. Additionally, retained earnings of EUR 529 million
  at December 2002 would be distributable after a payment of tax
  of EUR 97 million.

21.
  STOCK OPTION PLANS

On May 25,
  1992, the general meeting of shareholders authorized the Board
  of Directors to grant stock options, under one or several plans,
  for the benefit of Group management or personnel up to a maximum
  of 1.5% of the Companys share capital.

On June 8,
  1995, the Board of Directors was authorized by the Shareholders
  meeting to grant additional stock options, up to a maximum of
  3 % of the Companys share capital. This authorization
  was renewed in the general meeting of May 17, 2000 and will
  expire after five years on May 16, 2005.

Each plan
  is valid for 10 years; the options may be exercised after a
  3-year period as from the date the plan is implemented, with
  the exception of one of the two plans of May 14, 2001 concerning
  1,105,877 options, which is valid for eight years, and for which
  the options may be exercised after a period of four years.

This mandatory
  period may be waived in certain cases, such as retirement. For
  each plan, one option entitles the holder to purchase one LVMH
  share.

F-35

---

21.1
  Stock subscription plans

|              |                |               |               |            |              |                 | 
|------------- | -------------- | ------------- | ------------- | ---------- | ------------ | --------------- | 
|Shareholders' | Grant date     | Number of     | Number of     | Exercise   | Number of    | Outstanding     | 
|meeting       |                | stock options | beneficiaries | price(EUR) | options      | and exercisable | 
|              |                | granted (1)   |               | (2) (3)    | exercised in | options as of   | 
|              |                |               |               |            | 2002 (3)     | 12/31/2002      | 
|              |                |               |               |            |              |                 | 
|June 4, 1987  | March 18, 1992 | 47,498        | 861           | 20,89      | 36,295       | -               | 
|              |                |               |               |            |              |                 | 

21.2 Stock purchase plans

|                      |                          |                                         |                        |  |                                  |  |                                            |                                                                        
|--------------------- | ------------------------ | --------------------------------------- | ---------------------- |  | -------------------------------- |  | ------------------------------------------ | -----------------------------------------------------------------------
|Shareholders' meeting | Grant date               | Number ofstock optionsgranted
      (1) | Number ofbeneficiaries |  | Exerciseprice (EUR)(2)
      (3) |  | Number ofoptionsexercised in2002
      (3) | Outstandingand
      exercisableoptions
      as of12/31/2002
      (3)
|                      |                          |                                         |                        |  |                                  |  |                                            |                                                                        
|May 25, 1992          | March
      17, 1993     | 49,681                                  | 548                    |  | 15.40                            |  | 2,623                                      | 61,512                                                                 
|//                    | March
      16, 1994     | 139,031                                 | 364                    |  | 17.84                            |  | 3,560                                      | 1,594,680                                                              
|//                    | June
      17, 1994      | 1,250                                   | 1                      |  | 17.68                            |  | -                                          | 7,565                                                                  
|//                    | March
      22, 1995     | 256,903                                 | 395                    |  | 20.89                            |  | 17,750                                     | 431,870                                                                
|June 8, 1995          | May
      30, 1996       | 233,199                                 | 297                    |  | 34.15                            |  | 35,375                                     | 761,720                                                                
|//                    | May
      29, 1997       | 233,040                                 | 319                    |  | 37.50                            |  | 58,590                                     | 1,069,220                                                              
|//                    | January
      29, 1998   | 269,130                                 | 346                    |  | 25.92                            |  | 49,885                                     | 1,265,845                                                              
|//                    | March
      16, 1998     | 15,800                                  | 4                      |  | 31.25                            |  | -                                          | 86,900                                                                 
|//                    | January
      20, 1999   | 320,059                                 | 364                    |  | 32.10                            |  | 56,845                                     | 1,684,035                                                              
|//                    | September
      16, 1999 | 44,000                                  | 9                      |  | 54.65                            |  | -                                          | 220,000                                                                
|//                    | January
      19, 2000   | 376,110                                 | 552                    |  | 80.10                            |  | -                                          | 1,879,550                                                              
|May 17, 2000          | January
      23, 2001   | 2,649,075                               | 786                    |  | 65.12                            |  | -                                          | 2,606,075                                                              
|//                    | March
      6, 2001      | 40,000                                  | 1                      |  | 63.53                            |  | -                                          | 40,000                                                                 
|//                    | May
      14, 2001       | 1,105,877                               | 44,669                 |  | 66.00                            |  | -                                          | 1,105,877                                                              
|//                    | May
      14, 2001       | 552,500                                 | 4                      |  | 61.77                            |  | -                                          | 552,500                                                                
|//                    | September
      12, 2001 | 50,000                                  | 1                      |  | 52.48                            |  | -                                          | 50,000                                                                 
|//                    | January
      22, 2002   | 3,284,100                               | 993                    |  | 43.30                            |  | -                                          | 3,276,500                                                              
|//                    | May
      15, 2002       | 8,560                                   | 2                      |  | 54.83                            |  | -                                          | 8,560                                                                  
|                      |                          |                                         |                        |  |                                  |  |                                            |                                                                        
|Total                 |                          |                                         |                        |  |                                  |  |                                            | 16,702,409                                                             
|                      |                          |                                         |                        |  |                                  |  |                                            |                                                                        

|(1) | Number of options
      at the date of the plans issuance not restated to
      reflect the subsequent adjustments resulting from the one-for-ten
      bonus shares in July 1994 and June 1999, and the five-for-one
      stock splits in March 1994 and July 2000.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Figures prior to
      the 1999 fiscal year are derived from the conversion into
      euros of data initially recorded in francs.                                                                                                                                    
|(3) | Adjusted to reflect
      the transactions referred to in (1) above.                                                                                                                                                                                                  

F-36

---

21.3Changes
  over the period

|                                                    |            |   |            |   |           |  
|--------------------------------------------------- | ---------- | - | ---------- | - | --------- | -
|Number
      of options                             | 2002       |   | 2001       |   | 2000      |  
|                                                    |            |   |            |   |           |  
|Outstanding
      and exercisable as of January 1   | 13,725,832 |   | 9,769,865  |   | 1,670,539 |  
|Five-for-one
      stock split                      | -          |   | -          |   | 6,682,156 |  
|Granted                                             | 3,292,660  |   | 4,397,452  |   | 1,880,550 |  
|Exercised                                           | (260,923   | ) | (437,410   | ) | (460,120  | )
|Expired                                             | (55,160    | ) | (4,075     | ) | (3,260    | )
|                                                    |            |   |            |   |           |  
|Outstanding
      and exercisable as of December 31 | 16,702,409 |   | 13,725,832 |   | 9,769,865 |  
|                                                    |            |   |            |   |           |  

In December
  1996, the French Parliament adopted a law that requires French
  companies to pay social contributions and certain salary-based
  taxes, which may represent, for the Company, up to 33% of the
  taxable salary, on the difference between the exercise price
  of a stock option and the fair market value of the underlying
  shares on the exercise date if the beneficiary disposes of the
  shares within a five-year period following the grant of the
  option.

The new law
  is consistent with personal income tax law that requires individuals
  to pay income tax on the difference between the option exercise
  price and the fair value of the shares at the grant date if
  the shares are sold or otherwise disposed of within five years
  for all option grants prior to April 27, 2000 or within four
  years for all option grants after this date. The law applies
  to all options exercised after January 1, 1997.

The Company
  has not recorded a liability for social charges which may be
  assessed for option granted as of December 31, 2000, 2001 and
  2002 as the liability, being dependent on future trading values
  of the Companys shares and the timing of employees
  decisions to exercise options and sell the related shares, cannot
  be estimated. The Company also does not consider that liability
  is probable due to the income tax disincentives to employees
  of exercising options and selling the shares in less than a
  five-year period or four-year period, depending on whether the
  option was granted before or after April 27, 2000.

F-37

---

22.
  SEGMENT INFORMATION BY BUSINESS GROUP

|                                        |        |   |        |   |        |  
|--------------------------------------- | ------ | - | ------ | - | ------ | -
|(EUR
      millions)                    | 2002   |   | 2001   |   | 2000   |  
|                                        |        |   |        |   |        |  
|Net
      sales                         |        |   |        |   |        |  
|Wines
      and Spirits                 | 2,266  |   | 2,232  |   | 2,336  |  
|Fashion
      and Leather Goods         | 4,194  |   | 3,612  |   | 3,202  |  
|Perfumes
      and Cosmetics            | 2,336  |   | 2,231  |   | 2,072  |  
|Watches
      and Jewelry               | 552    |   | 548    |   | 614    |  
|Selective
      Retailing               | 3,337  |   | 3,493  |   | 3,294  |  
|Other
      activities and eliminations | 8      |   | 113    |   | 63     |  
|                                        |        |   |        |   |        |  
|Total                                   | 12,693 |   | 12,229 |   | 11,581 |  
|                                        |        |   |        |   |        |  
|Income
      from operations            |        |   |        |   |        |  
|Wines
      and Spirits                 | 750    |   | 676    |   | 716    |  
|Fashion
      and Leather Goods         | 1,297  |   | 1,274  |   | 1,169  |  
|Perfumes
      and Cosmetics            | 161    |   | 149    |   | 184    |  
|Watches
      and Jewelry               | (13    | ) | 27     |   | 59     |  
|Selective
      Retailing               | 20     |   | (213   | ) | (65    | )
|Other
      activities and eliminations | (207   | ) | (353   | ) | (104   | )
|                                        |        |   |        |   |        |  
|Total                                   | 2,008  |   | 1,560  |   | 1,959  |  
|                                        |        |   |        |   |        |  
|Total
      assets                      |        |   |        |   |        |  
|Wines
      and Spirits                 | 4,822  |   | 5,244  |   | 5,241  |  
|Fashion
      and Leather Goods         | 6,184  |   | 5,371  |   | 4,483  |  
|Perfumes
      and Cosmetics            | 2,450  |   | 2,543  |   | 2,568  |  
|Watches
      and Jewelry               | 1,625  |   | 1,662  |   | 1,560  |  
|Selective
      Retailing               | 4,477  |   | 5,054  |   | 5,147  |  
|Other
      activities and eliminations | 1,859  |   | 3,958  |   | 4,193  |  
|                                        |        |   |        |   |        |  
|Total                                   | 21,417 |   | 23,832 |   | 23,192 |  
|                                        |        |   |        |   |        |  
|Inventories
      and work-in-progress  |        |   |        |   |        |  
|Wines
      and Spirits                 | 1,912  |   | 2,018  |   | 1,953  |  
|Fashion
      and Leather Goods         | 459    |   | 395    |   | 280    |  
|Perfumes
      and Cosmetics            | 225    |   | 282    |   | 265    |  
|Watches
      and Jewelry               | 196    |   | 194    |   | 164    |  
|Selective
      Retailing               | 524    |   | 590    |   | 657    |  
|Other
      activities and eliminations | 111    |   | 176    |   | 63     |  
|                                        |        |   |        |   |        |  
|Total                                   | 3,427  |   | 3,655  |   | 3,382  |  
|                                        |        |   |        |   |        |  

As Sephora.com
  was reclassified from "Other Activities" to "Selective Retailing"
  in 2002, the data for 2000 and 2001 were restated in order to
  allow for comparisons.

F-38

---

23.
  INFORMATION BY GEOGRAPHICAL AREA

|                                                                           |       |   |       |   |       |  
|-------------------------------------------------------------------------- | ----- | - | ----- | - | ----- | -
|(EUR
      millions)                                                       | 2002  |   | 2001  |   | 2000  |  
|                                                                           |       |   |       |   |       |  
|Exports
      from French companies                                        | 3,611 |   | 3,582 |   | 3,261 |  
|                                                                           |       |   |       |   |       |  
|Exports
      as a percentage of net sales of the French subsidiaries      | 65    | % | 65    | % | 64    | %
|                                                                           |       |   |       |   |       |  
|Consolidated
      net sales outside France as a percentage of total sales | 83    | % | 83    | % | 85    | %
|                                                                           |       |   |       |   |       |  

The information
  below is presented on the basis of the Group companies' geographical
  locations:

|                                |        |   |        |   |        |  
|------------------------------- | ------ | - | ------ | - | ------ | -
|(EUR
      millions)            | 2002   |   | 2001   |   | 2000   |  
|                                |        |   |        |   |        |  
|Net
      sales                 |        |   |        |   |        |  
|France                          | 5,582  |   | 5,519  |   | 5,110  |  
|Europe
      (excluding France) | 2,457  |   | 2,375  |   | 2,105  |  
|U.S.A                           | 3,659  |   | 3,172  |   | 3,042  |  
|Japan                           | 1,817  |   | 1,774  |   | 1,678  |  
|Asia
      (excluding Japan)    | 1,916  |   | 2,048  |   | 2,096  |  
|Other
      countries           | 486    |   | 566    |   | 562    |  
|                                |        |   |        |   |        |  
|Total                           | 15,917 |   | 15,454 |   | 14,593 |  
|Eliminations                    | (3,224 | ) | (3,225 | ) | (3,012 | )
|                                |        |   |        |   |        |  
|Total                           | 12,693 |   | 12,229 |   | 11,581 |  
|                                |        |   |        |   |        |  
|Income
      from operations    |        |   |        |   |        |  
|France                          | 1,306  |   | 1,303  |   | 1,226  |  
|Europe
      (excluding France) | 56     |   | 32     |   | 108    |  
|U.S.A                           | (20    | ) | (378   | ) | (104   | )
|Japan                           | 354    |   | 312    |   | 272    |  
|Asia
      (excluding Japan)    | 281    |   | 267    |   | 412    |  
|Other                           | 31     |   | 24     |   | 45     |  
|                                |        |   |        |   |        |  
|Total                           | 2,008  |   | 1,560  |   | 1,959  |  
|                                |        |   |        |   |        |  
|Total
      assets              |        |   |        |   |        |  
|France                          | 10,635 |   | 12,311 |   | 12,168 |  
|Europe
      (excl. France)     | 4,139  |   | 4,169  |   | 4,493  |  
|U.S.A                           | 3,945  |   | 4,391  |   | 3,235  |  
|Japan                           | 708    |   | 642    |   | 604    |  
|Asia
      (excl. Japan)        | 1,565  |   | 1,728  |   | 1,988  |  
|Other                           | 425    |   | 591    |   | 704    |  
|                                |        |   |        |   |        |  
|Total
      assets              | 21,417 |   | 23,832 |   | 23,192 |  
|                                |        |   |        |   |        |  

F-39

---

24.
  FINANCIAL EXPENSE - NET

|                                                                      |      |   |      |   |      |  
|--------------------------------------------------------------------- | ---- | - | ---- | - | ---- | -
|(EUR
      millions)                                                  | 2002 |   | 2001 |   | 2000 |  
|                                                                      |      |   |      |   |      |  
|Interest
      expense                                                | (471 | ) | (658 | ) | (628 | )
|Interest
      income                                                 | 176  |   | 192  |   | 198  |  
|Gains
      (losses) on sales of short-term investments               | 9    |   | (33  | ) | 7    |  
|Allowance
      to provision for impairment of short-term investments | (3   | ) | 17   |   | (17  | )
|Foreign
      currency exchange gains (losses)                        | (5   | ) | 23   |   | 19   |  
|                                                                      |      |   |      |   |      |  
|                                                                      | (294 | ) | (459 | ) | (421 | )
|                                                                      |      |   |      |   |      |  
|of which,
      interest paid during the period                       | (479 | ) | (629 | ) | (624 | )
|                                                                      |      |   |      |   |      |  

25.
  OTHER INCOME AND EXPENSES - NET

In
  2002:

Other income
  and expenses primarily include the following items: a EUR 55
  million gain from the disposal of Pommery, Hard Candy and Urban
  Decay as well a various properties and equity stakes in Fininfo
  and Grand Marnier; an additional EUR 200 million provision for
  the depreciation of the equity stake in Bouygues; EUR 116 million
  in non-recurring asset depreciation, which included EUR 41 million
  for inventory and EUR 55 million for intangible assets; EUR
  17 million net gain from the sale of LVMH shares and changes
  in provisions on these shares; and finally an amount of EUR
  161 million relating notably to provisions for the restructuring
  of Moët Hennessys retail network in some regions,
  the final cost for disposing of the residual shareholding in
  Phillips and the closing of certain stores.

In
  2001:

Other income
  and expenses include gains and losses related to the LVMH share
  portfolio: capital gains of EUR 39 million on sales and a provision
  for impairment of the shares held at year-end for an amount
  of EUR 343 million. This account also includes accelerated depreciation
  of point-of-sale advertising inventories from the Perfumes and
  Cosmetics business group, and various write-downs of assets,
  in particular unconsolidated investments.

In
  2000:

Other net
  income and expenses mainly include capital gains on sales of
  LVMH shares, for an amount of EUR 115 million.

F-40

---

26.INCOME
  TAXES

26.1
  Components of the income before income tax expense

|                                           |                           |                      |   |       |   |       | 
|------------------------------------------ | ------------------------- | -------------------- | - | ----- | - | ----- | 
|                                           |                           | (EUR
      millions) |  
|                                           |                           |                      |   |       |   |       | 
|                                           |                           | 2002                 |   | 2001  |   | 2000  | 
|                                           |                           |                      |   |       |   |       | 
|Income
      / (loss) before income taxes: | -
      French companies  | (272                 | ) | (333  | ) | 1,101 | 
|                                           | -
      Foreign companies | 1,589                |   | 1,000 |   | 591   | 
|                                           |                           |                      |   |       |   |       | 
|                                           |                           | 1,317                |   | 667   |   | 1,692 | 
|                                           |                           |                      |   |       |   |       | 

26.2
  Analysis of the income tax expense

|                             |                           |                      |   |      |   |      |  
|---------------------------- | ------------------------- | -------------------- | - | ---- | - | ---- | -
|                             |                           | (EUR
      millions) |  
|                             |                           |                      |   |      |   |      |  
|                             |                           | 2002                 |   | 2001 |   | 2000 |  
|                             |                           |                      |   |      |   |      |  
|Current
      income taxes:  | -
      French companies  | (210                 | ) | (152 | ) | (386 | )
|                             | -
      Foreign companies | (287                 | ) | (300 | ) | (292 | )
|                             |                           |                      |   |      |   |      |  
|                             |                           | (497                 | ) | (452 | ) | (678 | )
|Deferred
      income taxes: | -
      French companies  | 115                  |   | 246  |   | 33   |  
|                             | -
      Foreign companies | 32                   |   | 14   |   | 12   |  
|                             |                           |                      |   |      |   |      |  
|                             |                           | 147                  |   | 260  |   | 45   |  
|                             |                           |                      |   |      |   |      |  
|Total                        |                           | (350                 | ) | (192 | ) | (633 | )
|                             |                           |                      |   |      |   |      |  

26.3
  Main components of deferred taxes

- In
    the statement of income

|                                                                                    |      |   |      |   |      |  
|----------------------------------------------------------------------------------- | ---- | - | ---- | - | ---- | -
|(EUR
      millions)                                                                | 2002 |   | 2001 |   | 2000 |  
|                                                                                    |      |   |      |   |      |  
|Deferred
      foreign exchange gains and losses                                    | (2   | ) | (21  | ) | 21   |  
|Intercompany
      profit included in inventories                                   | 4    |   | 1    |   | 20   |  
|Valuation
      differences                                                         | 16   |   | 7    |   | 8    |  
|Loss
      and contingency provisions and provisions for impairment
      of assets | 5    |   | (20  | ) | (12  | )
|Other
      adjustments and consolidation entries                                   | 13   |   | 30   |   | 21   |  
|Unrealized
      capital gains and losses                                           | 8    |   | 27   |   | -    |  
|Tax losses
      carried forward                                                    | 103  |   | 246  |   | -    |  
|Impact
      of income tax rate changes                                             | -    |   | (10  | ) | (13  | )
|                                                                                    |      |   |      |   |      |  
|Deferred
      tax income (expense)                                                 | 147  |   | 260  |   | 45   |  
|                                                                                    |      |   |      |   |      |  

F-41

---

- In
    the balance sheet

|                                                                                    |      |   |      |   |      |  
|----------------------------------------------------------------------------------- | ---- | - | ---- | - | ---- | -
|(EUR
      millions)                                                                | 2002 |   | 2001 |   | 2000 |  
|                                                                                    |      |   |      |   |      |  
|Intercompany
      margins                                                          | 144  |   | 153  |   | 146  |  
|Valuation
      differences                                                         | (280 | ) | (271 | ) | (145 | )
|Loss
      and contingency provisions and provisions for impairment
      of assets | 93   |   | 95   |   | 79   |  
|Consolidation
      adjustments (1)                                                 | 34   |   | 26   |   | 96   |  
|Unrealized
      capital gains and losses                                           | 58   |   | 48   |   | (8   | )
|Tax losses
      carried forward                                                    | 376  |   | 248  |   | (4   | )
|Other                                                                               | 5    |   | 76   |   | (8   | )
|                                                                                    |      |   |      |   |      |  
|Net
      deferred tax                                                              | 430  |   | 375  |   | 156  |  
|                                                                                    |      |   |      |   |      |  
|including
      short-term deferred tax assets                                      | 555  |   | 544  |   | 266  |  
|long-term
      deferred tax liabilities                                            | (125 | ) | (169 | ) | (110 | )
|                                                                                    |      |   |      |   |      |  

26.4
  Reconciliation of the French statutory tax rate to the effective
  tax rate

The reconciliation
  of the French statutory tax rate to the effective tax rate recorded
  in the consolidated financial statements is as follows:

|                                                                                                                       |              |   |              |   |              |  
|---------------------------------------------------------------------------------------------------------------------- | ------------ | - | ------------ | - | ------------ | -
|(as
      a % of income before taxes)                                                                                  | 2002         |   | 2001         |   | 2000         |  
|                                                                                                                       |              |   |              |   |              |  
|French
      statutory tax rate                                                                                        | 33
      1/3 |   | 33
      1/3 |   | 33
      1/3 |  
|                                                                                                                       |              |   |              |   |              |  
|- Temporary
      supplementary income tax applicable to Frenchcompanies                                               | 0.83         |   | 3.24         |   | 20.80        |  
|                                                                                                                       |              |   |              |   |              |  
|- Impact
      of the differences in tax rates for foreignsubsidiaries                                                 | (1.14        | ) | (5.10        | ) | (4.00        | )
|                                                                                                                       |              |   |              |   |              |  
|- Losses
      of subsidiaries or consolidated tax groups                                                              | (6.00        | ) | (5.87        | ) | 8.60         |  
|                                                                                                                       |              |   |              |   |              |  
|- Impact
      of the differences between consolidated and taxableincome
      (loss), and impact of reduced tax rates | (1.20        | ) | 2.10         |   | (3.80        | )
|                                                                                                                       |              |   |              |   |              |  
|- Impact
      of withholding tax                                                                                      | 0.74         |   | 1.00         |   | 0.50         |  
|                                                                                                                       |              |   |              |   |              |  
|Effective
      tax rate                                                                                               | 26.6         |   | 28.7         |   | 37.4         |  
|                                                                                                                       |              |   |              |   |              |  

In 2000,
  French companies were subject to a supplementary income tax
  of 13% of the basic rate, which was reduced to 9.3% in 2001
  and 6.3% in 2002. This supplementary income tax resulted an
  in additional tax expense of EUR 10 million for fiscal year
  2002 (EUR 8 million in 2001 and EUR 45 million in 2000).

26.5
  Tax loss carry forwards

As of December
  31, 2002, the unused tax loss carry forwards which had not given
  rise to the recognition of deferred tax assets, amount to EUR
  1,810 million (EUR 1,903 million in 2001 and EUR 1,370 million
  in 2000), including EUR 569 million in loss carry forwards arising
  in 2002 (EUR 693 million in 2001 and EUR 431 million in 2000).

F-42

---

26.6
  Tax consolidation

- 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 related tax consolidations, which primarily
    concerns the parent company LVMH, permitted tax savings of
    EUR 314 million in 2002 (EUR 310 million in 2001; EUR 59 million
    in 2000).
- The application
    of other tax sharing agreements in certain foreign countries,
    notably in the U.S and in Great Britain, provided additional
    tax savings of EUR 35 million in 2002 (EUR 51 million in 2001,
    EUR 40 million in 2000).

27.
  AMORTIZATION OF GOODWILL

|                                                        |      |   |      |   |      |  
|------------------------------------------------------- | ---- | - | ---- | - | ---- | -
|(EUR
      millions)                                    | 2002 |   | 2001 |   | 2000 |  
|                                                        |      |   |      |   |      |  
|- Fully
      consolidated companies                    | (260 | ) | (160 | ) | (141 | )
|                                                        |      |   |      |   |      |  
|- Companies
      accounted for using the equity method | (2   | ) | (8   | ) | -    |  
|                                                        |      |   |      |   |      |  
|Total                                                   | (262 | ) | (168 | ) | (141 | )
|                                                        |      |   |      |   |      |  

28.
  UNUSUAL ITEMS

In
  2001:

Unusual items
  include earnings of EUR 864 million related to the investment
  in Gucci stock, including a capital gain of EUR 774 million
  from the sale of this investment and an exceptional dividend
  of EUR 90 million received in the fourth quarter of the year.
  Unusual items also include a provision for reorganization for
  an amount of EUR 446 million, including EUR 385 million for
  the Selective Retailing business group. Exceptional asset write-downs
  or amortization expenses of EUR 480 million were also recorded,
  including EUR 323 million for DFS goodwill, EUR 82 million for
  the Bouygues investment and EUR 60 million for media and telecommunications
  investments. The financial statements as of December 31, 2001
  also reflect the EUR 141 million impact of the sale of the controlling
  interest in Phillips, de Pury & Luxembourg to its current
  management; this expense mainly corresponds to the full amortization
  of related goodwill.

Unusual items
  are presented net of their positive impact on taxes representing
  EUR 71 million.

In
  2000:

Unusual items
  include capital gains from sales of shares, particularly of
  Diageo shares, amounting to EUR 124 million, EUR 87 million
  in respect of provisions for impairment of investments or e-business
  activity, and EUR 57 million in exceptional costs incurred to
  develop the Phillips business and promote its image.

*
  
  **

For 2000
  and 2001, the balance of unusual items not detailed
  above corresponds to exceptional changes in loss and contingency
  provisions.

F-43

---

29.
  EXPOSURE TO FOREIGN EXCHANGE AND INTEREST RATE RISKS

29.1
  Financial instruments

Financial
  instruments are used to hedge risks in connection with Group
  activity. Management of these instruments, most often traded
  on organized or comparable markets, is primarily centralized.
  The counterparts are chosen according to their international
  rating, as well as for diversification reasons.

- Foreign
  exchange risk:

- Group subsidiaries
    carry out a significant portion of their sales and occasionally
    their purchases in foreign currencies. Hedging instruments
    are used to reduce the risks arising from foreign currency
    fluctuations against the various companies' own currencies.
    They are allocated to either accounts receivable or accounts
    payable for the period, or, within certain limits, to anticipated
    future transactions.
- The Group
    may also use appropriate financial instruments to hedge net
    equity in, or dividends to be received from, foreign subsidiaries,
    with the objective of limiting the effect of foreign currency
    fluctuations as compared to the euro on consolidated stockholders
    equity.
- In order
    to reduce the impact of exchange rate differences on the level
    of consolidated revenues and net income, LVMH may also, from
    time to time, use financial instruments that are not designated
    as hedges. The revaluation of those financial instruments
    at market value reduces the effect of currency fluctuations.

- Interest
  rate risk:

Hedging instruments
  are linked to specific financial debt. Each instrument has a
  due date that falls on or before the maturity of the corresponding
  debt and the same nominal value as the hedged debt.

The accounting
  method used for these instruments is described in the accounting
  policies in Note 2.3.

F-44

---

1. Hedges
  of foreign exchange risks

Based on
  the exchange rate as of December 31, 2002 total outstanding
  hedges for all currencies, by nature and amount, in force as
  of December 31, 2002 are as follows:

|  |                                                  |                            |   |                               |   |                    |  |     |  |     | 
|- | ------------------------------------------------ | -------------------------- | - | ----------------------------- | - | ------------------ |  | --- |  | --- | 
|  |                                                  | Hedges
      allocated to: |   | Deferred
      gains (losses) |   | Market
      value | 
|  | (EUR
      millions)                             | 2002                       |   | 2003                          |   | 2004+              |  |     |  |     | 
|  |                                                  |                            |   |                               |   |                    |  |     |  |     | 
| | Instruments
      hedging sales transactions     |                            |   |                               |   |                    |  |     |  |     | 
|  |                                                  |                            |   |                               |   |                    |  |     |  |     | 
|  | Forward
      sales contracts                    |                            |   |                               |   |                    |  |     |  |     | 
|  | -
      US dollar                                | -                          |   | 20                            |   | -                  |  | 1   |  | 1   | 
|  | -
      Yen                                      | 38                         |   | 8                             |   | -                  |  | -   |  | -   | 
|  | -
      Other                                    | 39                         |   | 60                            |   | -                  |  | 4   |  | 4   | 
|  |                                                  |                            |   |                               |   |                    |  |     |  |     | 
|  |                                                  | 77                         |   | 88                            |   | -                  |  | 5   |  | 5   | 
|  |                                                  |                            |   |                               |   |                    |  |     |  |     | 
|  | Forward
      Inbox                              |                            |   |                               |   |                    |  |     |  |     | 
|  | -
      US dollar                                | -                          |   | 41                            |   | 20                 |  | 8   |  | 29  | 
|  | -
      Yen                                      | -                          |   | 36                            |   | 17                 |  | 10  |  | 18  | 
|  | -
      Other                                    | -                          |   | -                             |   | -                  |  | -   |  | -   | 
|  |                                                  |                            |   |                               |   |                    |  |     |  |     | 
|  |                                                  | -                          |   | 77                            |   | 37                 |  | 18  |  | 47  | 
|  |                                                  |                            |   |                               |   |                    |  |     |  |     | 
|  | Options                                          |                            |   |                               |   |                    |  |     |  |     | 
|  | -
      US dollar                                | 150                        |   | 846                           |   | 122                |  | 151 |  | 118 | 
|  | -
      Yen                                      | 72                         |   | 411                           |   | 117                |  | 50  |  | 42  | 
|  | -
      Other                                    | -                          |   | 33                            |   | 12                 |  | 1   |  | 1   | 
|  |                                                  |                            |   |                               |   |                    |  |     |  |     | 
|  |                                                  | 222                        |   | 1,290                         |   | 251                |  | 202 |  | 161 | 
|  |                                                  |                            |   |                               |   |                    |  |     |  |     | 
|  | Other
      transactions                         | (2                         | ) | (2                            | ) | -                  |  | -   |  | -   | 
|  |                                                  |                            |   |                               |   |                    |  |     |  |     | 
|  |                                                  |                            |   |                               |   |                    |  |     |  |     | 
|  | TOTAL                                            | 297                        |   | 1,453                         |   | 288                |  | 225 |  | 213 | 
|  |                                                  |                            |   |                               |   |                    |  |     |  |     | 
| | Instruments
      hedging financial transactions |                            |   |                               |   |                    |  |     |  |     | 
|  |                                                  |                            |   |                               |   |                    |  |     |  |     | 
|  | Net
      equity and dividends                   |                            |   |                               |   |                    |  |     |  |     | 
|  |                                                  |                            |   |                               |   |                    |  |     |  |     | 
|  | Forward
      sales contracts                    | 46                         |   | 17                            |   | -                  |  | 3   |  | 3   | 
|  | Forward
      Inbox                              | -                          |   | 23                            |   | -                  |  | 3   |  | 4   | 
|  | Options                                          | -                          |   | 62                            |   | -                  |  | 6   |  | 5   | 
|  |                                                  |                            |   |                               |   |                    |  |     |  |     | 
|  |                                                  | 46                         |   | 102                           |   | -                  |  | 12  |  | 12  | 
|  |                                                  |                            |   |                               |   |                    |  |     |  |     | 
| | Other
      transactions                         | (64                        | ) | -                             |   | -                  |  | -   |  | -   | 
|  |                                                  |                            |   |                               |   |                    |  |     |  |     | 
|  | TOTAL                                            | (18                        | ) | 102                           |   | -                  |  | 12  |  | 12  | 
|  |                                                  |                            |   |                               |   |                    |  |     |  |     | 

As of December
  31, 2001, deferred income amounted to EUR 126 million (EUR 164
  million in 2000).

F-45

---

2. Hedges
  of interest rate risk

Hedges outstanding
  as of December 31, 2002, by nature and notional amount, are
  as follows:

|                          |                |  |                  |  |                   | 
|------------------------- | -------------- |  | ---------------- |  | ----------------- | 
|                          | Maturity       | 
|(EUR
      millions)      | <
      1 year |  | 1
      to 5 yrs |  | 5
      to 10 yrs | 
|                          |                |  |                  |  |                   | 
|Fixed
      rate swaps    | -              |  | 564              |  | -                 | 
|Floating
      rate swaps | 2,860          |  | 4,123            |  | 561               | 
|Caps
      bought         | 2,947          |  | 2,166            |  | -                 | 
|Floors
      sold         | -              |  | 650              |  | -                 | 
|                          |                |  |                  |  |                   | 

Taking the
  above instruments into consideration, fixed-rate debt or capped
  floating-rate debt (including the repackaged notes) represents
  approximately 51% of total consolidated debt.

In these
  conditions, the effect on net income of an interest rate fluctuation
  of 1% would be EUR 30 million.

29.2
  Translation of the accounts of foreign subsidiaries

The portion
  of the consolidated net income for 2002 deriving from subsidiaries
  which prepare their financial statements in Pounds Sterling,
  Japanese Yen or currencies linked to the US Dollar amounts to
  EUR 265 million. A 10% change in exchange rates for these currencies
  would have an impact of EUR 61 million on income from operations
  and EUR 26 million on net income.

F-46

---

30.
  OTHER COMMITMENTS, CONTINGENCIES AND LITIGATION IN PROCESS AT
  YEAR END

|30.1
      Purchase commitments             |      |  |      |  |       | 
|------------------------------------------- | ---- |  | ---- |  | ----- | 
|                                            |      |  |      |  |       | 
|(in
      EUR millions)                     | 2002 |  | 2001 |  | 2000  | 
|                                            |      |  |      |  |       | 
|Grapes,
      wines and distilled alcohol   | 429  |  | 413  |  | 407   | 
|Industrial
      or commercial fixed assets | 104  |  | 80   |  | 111   | 
|Share
      purchase commitments (1)        | 756  |  | 975  |  | 1,093 | 
|                                            |      |  |      |  |       | 

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 or distilled alcohol.
  These commitments are valued according to each business activity,
  based on contractual terms or the prices available as of year-end
  and estimated yields. They mainly concern the supplies for 2003
  and 2004.

Share purchase
  commitments represent the contractual commitments entered into
  by the Group to purchase minority interests in consolidated
  subsidiaries, shareholdings, additional investments in unconsolidated
  companies, or for the payment of any additional prices in connection
  with transactions carried out.

These amounts
  do not include the impact of the memorandum of understanding
  entered into on January 20, 1994 between LVMH and Diageo. According
  to this agreement, LVMH agreed to repurchase Diageo's 34% interest
  in Moët Hennessy, with six-months' notice, for an amount
  equal to 80% of the investment value as of the date of its promise.
  At the date of the memorandum of understanding, Diageo's interest
  in Moët Hennessy was assessed at more than EUR 1.2 billion.

30.2
  Assignment of trade accounts receivable

|                                                      |      |  |      |  |      | 
|----------------------------------------------------- | ---- |  | ---- |  | ---- | 
|(EUR
      millions)                                  | 2002 |  | 2001 |  | 2000 | 
|                                                      |      |  |      |  |      | 
|Receivables
      assigned pursuant to the Dailly law | 260  |  | 266  |  | 123  | 
|                                                      |      |  |      |  |      | 

As there
  is a possible recourse that may be taken by the assignee against
  LVMH, for an amount of EUR 100 million, (should the debtor default
  on the assigned receivable), the net financing effectively taken
  out as of December 31, 2002 amounts only to EUR 160 million
  (EUR 158 million as of December 31, 2001, EUR 60 million as
  of December 31, 2000).

30.3
  Deposits, sureties and other guarantees

|                            |      |  |      |  |      | 
|--------------------------- | ---- |  | ---- |  | ---- | 
|(EUR
      millions)        | 2002 |  | 2001 |  | 2000 | 
|                            |      |  |      |  |      | 
|Guarantees
      given      |      |  |      |  |      | 
|Sureties
      and deposits | 134  |  | 58   |  | 93   | 
|Mortgages
      and pledges | 12   |  | 16   |  | 96   | 
|Other                       | 49   |  | 155  |  | 84   | 
|                            |      |  |      |  |      | 
|Guarantees
      received   | 12   |  | 15   |  | 27   | 
|                            |      |  |      |  |      | 

F-47

---

30.4
  Lease and similar commitments

As of December
  31, 2002, a total number of 1,526 stores were operated by the
  Group worldwide, particularly for the Fashion and Leather Goods
  and Selective Retailing business groups.

In a large
  number of countries, rentals for these stores are contingent
  on payment of minimum amounts, especially when the leases include
  rent clauses indexed to net sales; this is the case in particular
  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
  fixed assets or industrial equipment have been acquired under
  or refinanced by capital leases or lease-back agreements.

As of December
  31, 2002, the breakdown of future non-cancelable commitments
  arising from these arrangements is as follows:

|                                                          |       |   |       |   |       |  
|--------------------------------------------------------- | ----- | - | ----- | - | ----- | -
|(EUR
      millions)                                      | 2002  |   | 2001  |   | 2000  |  
|                                                          |       |   |       |   |       |  
|Operating
      leases                                    | 2,251 |   | 1,934 |   | 1,669 |  
|                                                          |       |   |       |   |       |  
|Payments
      due on concessions                         | 916   |   | 1,041 |   | 973   |  
|                                                          |       |   |       |   |       |  
|Capital
      lease payments due                          | 531   |   | 648   |   | 621   |  
|                                                          |       |   |       |   |       |  
|Lease
      commitments                                   | 3,698 |   | 3,623 |   | 3,263 |  
|                                                          |       |   |       |   |       |  
|Interest
      included in capital lease payments         | (387  | ) | (470  | ) | (455  | )
|                                                          |       |   |       |   |       |  
|Lease
      payments excluding interests in capital lease | 3,311 |   | 3,153 |   | 2,808 |  
|                                                          |       |   |       |   |       |  

Rental expense
  incurred in respect of all operating leases (net of subleasing
  effects) is as follows:

|                             |      |  |      |  |      | 
|---------------------------- | ---- |  | ---- |  | ---- | 
|(EUR
      millions)         | 2002 |  | 2001 |  | 2000 | 
|                             |      |  |      |  |      | 
|Minimum
      lease payments | 334  |  | 509  |  | 446  | 
|                             |      |  |      |  |      | 

30.5
  Schedule of commitments as of December 31, 2002

|                                                                 |       |  |              |  |              |  |              |  |              | 
|---------------------------------------------------------------- | ----- |  | ------------ |  | ------------ |  | ------------ |  | ------------ | 
|                                                                 |       |  | less         |  | 2
      to 3 |  | 4
      to 5 |  | more         | 
|(EUR
      millions)                                             | Total |  | than
      1 |  | years        |  | years        |  | than
      5 | 
|                                                                 |       |  | year         |  |              |  |              |  | years        | 
|                                                                 |       |  |              |  |              |  |              |  |              | 
|                                                                 |       |  |              |  |              |  |              |  |              | 
|Grapes,
      wines and distilled alcohol                        | 429   |  | 212          |  | 143          |  | 64           |  | 10           | 
|                                                                 |       |  |              |  |              |  |              |  |              | 
|Industrial
      or commercial fixed assets                      | 104   |  | 93           |  | 7            |  | 4            |  | -            | 
|Share
      purchase commitments (*)                             | 756   |  | 373          |  | 55           |  | 225          |  | 103          | 
|Receivables
      assigned pursuant to the Dailly law            | 260   |  | 260          |  | -            |  | -            |  | -            | 
|Lease
      commitments and similar commitments                  |       |  |              |  |              |  |              |  |              | 
|- Operating
      leases                                         | 2,251 |  | 321          |  | 565          |  | 477          |  | 888          | 
|- Payments
      due on concessions                              | 916   |  | 263          |  | 369          |  | 118          |  | 166          | 
|                                                                 |       |  |              |  |              |  |              |  |              | 
|- Capital
      lease payments (387 of which relate to interest) | 531   |  | 16           |  | 33           |  | 28           |  | 454          | 
|                                                                 |       |  |              |  |              |  |              |  |              | 
|Deposits,
      sureties and other guarantees given              | 195   |  | 25           |  | 7            |  | 17           |  | 146          | 
|                                                                 |       |  |              |  |              |  |              |  |              | 

F-48

---

30.6
  Other commitments

To the Group's
  knowledge, there are no off-balance sheet commitments other
  than those described above.

30.7
  Contingent liabilities and disputes in progress

In the ordinary
  course of its business, the Group is a party from time to time
  to legal proceedings involving trademarks and intellectual property,
  selective distribution agreements, license agreements, employee
  relations, tax audits, and other matters incidental to its business.
  The Group considers that the provisions included in the balance
  sheet, related to litigation and contingent liabilities known
  or in-process at December 31, 2002, are sufficient to cover
  any unfavorable outcome, so that the Group's consolidated financial
  position would not be materially adversely affected.

31.
  RESEARCH AND DEVELOPMENT COSTS

Research
  and development costs amounted to EUR 36 million in 2002 (EUR
  27 million in 2001, EUR 21 million in 2000).These amounts cover
  expenses incurred in scientific research and new product creation.
  Research and development costs, broadened to encompass packaging
  and design expenses, amounted to EUR 47 million in 2002 (EUR
  37 million in 2001; EUR 40 million in 2000).

F-49

---

32.
  EMPLOYEE INFORMATION

32.1
  Headcount

The average
  headcount in 2002 was 53,812 (53,173 in 2001; 47,420 in 2000).

As of December
  31, the headcount of fully consolidated companies was as follows:

|                                          |        |  |        |  |        | 
|----------------------------------------- | ------ |  | ------ |  | ------ | 
|                                          | 2002   |  | 2001   |  | 2000   | 
|                                          |        |  |        |  |        | 
|By
      business group                   |        |  |        |  |        | 
|Wines
      and Spirits                   | 4,801  |  | 5,089  |  | 5,154  | 
|Fashion
      and Leather Goods           | 16,323 |  | 13,402 |  | 11,006 | 
|Perfumes
      and Cosmetics              | 13,006 |  | 13,087 |  | 12,758 | 
|Watches
      and Jewelry                 | 2,366  |  | 2,233  |  | 1,830  | 
|Selective
      Retailing                 | 18,243 |  | 18,542 |  | 18,540 | 
|Other
      Activities                    | 1,073  |  | 1,442  |  | 1,839  | 
|                                          |        |  |        |  |        | 
|TOTAL                                     | 55,812 |  | 53,795 |  | 51,127 | 
|                                          |        |  |        |  |        | 
|By
      geographical area                |        |  |        |  |        | 
|France                                    | 20,214 |  | 19,700 |  | 18,374 | 
|Europe
      (excluding France)           | 10,671 |  | 10,114 |  | 9,088  | 
|U.S.A.                                    | 12,798 |  | 12,019 |  | 12,071 | 
|Japan                                     | 3,874  |  | 3,462  |  | 2,918  | 
|Asia
      (excluding Japan)              | 8,255  |  | 8,500  |  | 8,676  | 
|                                          |        |  |        |  |        | 
|TOTAL                                     | 55,812 |  | 53,795 |  | 51,127 | 
|                                          |        |  |        |  |        | 
|By
      category                         |        |  |        |  |        | 
|. Labor
      and production              | 8,979  |  | 9,027  |  | 8,333  | 
|. Office
      and clerical               | 31,628 |  | 30,820 |  | 29,105 | 
|. Technicians
      and supervisory staff | 5,568  |  | 4,995  |  | 4,630  | 
|. Executives
      and management         | 9,637  |  | 8,953  |  | 9,059  | 
|                                          |        |  |        |  |        | 
|TOTAL                                     | 55,812 |  | 53,795 |  | 51,127 | 
|                                          |        |  |        |  |        | 

32.2
  Payroll costs

- Payroll
    costs totaled EUR 2,252 million (EUR 2,242 million in 2001;
    EUR 1,989 million in 2000).
- In accordance
    with French law, all French companies employing more than
    50 people are required to have a profit-sharing scheme. Amounts
    are usually distributed in proportion to salaries.Most French companies of the Group have set up
    incentive schemes based on sales, earnings and productivity
    targets. Amounts are also generally distributed in proportion
    to salaries.The total cost recorded for profit sharing and
    incentive schemes in 2002 amounts to EUR 69 million (EUR 54
    million in 2001, EUR 55 million in 2000).

F-50

---

32.3
  Compensation of directors and officers

In 2002,
  LVMH paid a total of EUR 952 thousand in Directors' fees to
  members of its Board of Directors.

Remuneration
  paid to members of the Board of Directors and to members of
  the Executive Committee, representing a total of 18 individuals,
  amounted to EUR 1,007 thousand and EUR 33,191 thousand, respectively.

32.4
  Expenses and provisions regarding pensions, medical costs and
  similar commitments

- Net
    expense for the year

| |                                                |      |   |      |   |      |  
| | ---------------------------------------------- | ---- | - | ---- | - | ---- | -
| | (EUR
      millions)                           | 2002 |   | 2001 |   | 2000 |  
| |                                                |      |   |      |   |      |  
| | Service
      cost                             | 34   |   | 24   |   | 39   |  
| | Interest
      cost                            | 15   |   | 15   |   | 18   |  
| | Expected
      return on plan assets           | (6   | ) | (7   | ) | (4   | )
| | Amortization
      of actuarial gains & losses | 3    |   | 4    |   | 5    |  
| | Curtailment
      loss                         | -    |   | 7    |   | -    |  
| |                                                |      |   |      |   |      |  
| | Net
      pension cost                         | 46   |   | 43   |   | 58   |  
| |                                                |      |   |      |   |      |  

- Breakdown
    of the provision recorded in the balance sheet

| |                                               |      |   |      |   |      |  
| | --------------------------------------------- | ---- | - | ---- | - | ---- | -
| | (EUR
      millions)                          | 2002 |   | 2001 |   | 2000 |  
| |                                               |      |   |      |   |      |  
| | Projected
      benefit obligation            | 351  |   | 292  |   | 255  |  
| | Market
      value of plan assets (1)         | (136 | ) | (113 | ) | (107 | )
| | Actuarial
      gains & losses not recognized | (38  | ) | (4   | ) | (3   | )
| |                                               |      |   |      |   |      |  
| | Provision
      recorded in the balance sheet | 177  |   | 175  |   | 145  |  
| |                                               |      |   |      |   |      |  

F-51

---

- Analysis
    of changes in commitments

| |                                                                    |            |   |                    |   |               |   |                     |  
| | ------------------------------------------------------------------ | ---------- | - | ------------------ | - | ------------- | - | ------------------- | -
| |                                                                    | Projected  |   | Market
      value |   | Actuarial     |   |                     |  
| | (EUR
      millions)                                               | benefit    |   | of
      plan      |   | gains
      & |   | Balance
      sheet |  
| |                                                                    | obligation |   | assets             |   | losses        |   | liability           |  
| |                                                                    |            |   |                    |   |               |   |                     |  
| | Balance
      as of December 31, 2000                              | 255        |   | (107               | ) | (3            | ) | 145                 |  
| |                                                                    |            |   |                    |   |               |   |                     |  
| | Net
      expense for the period                                   | 39         |   | (7                 | ) | 11            |   | 43                  |  
| | Payments
      made to beneficiaries                               | (12        | ) | 7                  |   | -             |   | (5                  | )
| | Increase
      in plan assets (contributions)                      | -          |   | (21                | ) | -             |   | (21                 | )
| | Impact
      of exchange rate fluctuations                         | 5          |   | (1                 | ) | -             |   | 4                   |  
| | Impact
      of changes in the scope of consolidation              | 9          |   | -                  |   | -             |   | 9                   |  
| | Other
      (of which actuarial differences and changes in regime) | (4         | ) | 16                 |   | (12           | ) | -                   |  
| |                                                                    |            |   |                    |   |               |   |                     |  
| | Balance
      as of December 31, 2001                              | 292        |   | (113               | ) | (4            | ) | 175                 |  
| |                                                                    |            |   |                    |   |               |   |                     |  
| | Net
      expense for the period                                   | 49         |   | (6                 | ) | 3             |   | 46                  |  
| | Payments
      made to beneficiaries                               | (16        | ) | 8                  |   | -             |   | (8                  | )
| | Increase
      in plan assets (contributions)                      | -          |   | (22                | ) | -             |   | (22                 | )
| | Impact
      of exchange rate fluctuations                         | (20        | ) | 5                  |   | -             |   | (15                 | )
| | Impact
      of changes in the scope of consolidation              | 1          |   | -                  |   | -             |   | 1                   |  
| | Other
      (of which actuarial differences and changes in regime) | 45         |   | (8                 | ) | (37           | ) | -                   |  
| |                                                                    |            |   |                    |   |               |   |                     |  
| | Balance
      as of December 31, 2002                              | 351        |   | (136               | ) | (38           | ) | 177                 |  
| |                                                                    |            |   |                    |   |               |   |                     |  

The actuarial
  assumptions used to estimate the commitments in the main countries
  where such commitments have been undertaken, are as follows:

|Discount
      rate                       | 2.50%
      in Japan, 3.00% to 4.50% in France, 6.50% to 7.00% in the
      US
|----------------------------------------- | ------------------------------------------------------------------------------
|Expected
      long-term return on assets | 4.00%
      in Japan, 4.50% in France, 8.70% in the US                        
|Future
      salary increase rate         | 2.00%
      to 4.75%                                                          

33.
  SUBSEQUENT EVENTS

- In the
    first quarter of 2003, LVMH increased its stake in Fendi to
    84.1% through by acquiring shares representing 17.2% of the
    capital, for an amount of EUR 190 million.
- In February
    2003, LVMH:

| | - | sold
      its 36% stake in Michaël Kors for an amount of 13.9
      million US dollars;                                                                                                 
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | - | sold
      its remaining interest of 27.5% in Phillips, for a symbolic
      price of 1 US dollar. This had no additional impact other
      than that the one already recorded for 2002;
| | - | increased
      its equity investment in Rossimoda from 45% to 97%, for
      an amount of EUR 32.5 million.                                                                             

F-52

---

|34. | SUMMARY OF DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES ADOPTED
      BY LVMHAND
      GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED STATES
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------

34.1
  Differences between French GAAP and US GAAP

The accompanying
  financial statements for 2002, 2001 and 2000 are prepared in
  accordance with accounting principles, which differ in certain
  respects from those generally accepted in the United States
  (US GAAP). The differences are described below:

a)
  Treasury shares

In accordance
  with French GAAP, treasury shares are recorded as assets or
  deducted from stockholders equity depending on their nature
  (see Note 2.11). For treasury shares reported as assets, allowances
  are recorded when the fair market value is below the carrying
  value of these shares. Gains and losses resulting from the sale
  of these shares are recorded through the statement of income.
  Additionally, the number of treasury shares recorded as assets
  is included in the total number of shares used for earnings
  per share calculation.

Under US
  GAAP, the cost of all treasury shares would be deducted from
  stockholders' equity, and the related number of shares would
  be excluded from the number of shares used for the earnings
  per share calculations. Treasury shares would not be adjusted
  to reflect changes in their market value and any re-issuances
  would not impact net income.

b)
  Available-for-sale securities

Under French
  GAAP, investments in debt and equity securities are accounted
  for at the lower of cost or fair value, the related valuation
  allowance being charged through the statement of income. Unrealized
  gains are not recognized in income. The fair value for these
  investments is measured according to such criteria as the value
  of the Groups share in the net assets, the stock price
  or earnings and cash flow prospects, weighted by the effects
  of holding these investments for the Group in terms of strategy,
  or synergy with existing businesses.

Under US
  GAAP, in accordance with SFAS 115, those investments classified
  by Management as available-for-sale securities would
  be measured in the balance sheet at their fair value; the unrealized
  holding gains and losses at year-end, net of tax effect, would
  be included in stockholders' equity until realized, except for
  the net effects of other-than-temporary declines in fair value
  below the cost basis. Once a determination that an other-than-temporary
  impairment has occurred, the investment would be written down
  to its fair value as a realized loss charged to the income statement.

Under US
  GAAP, the securities would be as follows:

|                                    |       |  |            |  |            |   |                      |  |                | 
|----------------------------------- | ----- |  | ---------- |  | ---------- | - | -------------------- |  | -------------- | 
|                                    |       |  | Gross      |  | Gross      |   |                      |  |                | 
|                                    |       |  | unrealized |  | unrealized |   | Estimated
      fair |  |                | 
|(EUR
      millions)                | Cost  |  | gains      |  | losses     |   | value                |  | Net
      cost | 
|                                    |       |  |            |  |            |   |                      |  |                | 
|As
      of December 31, 2002       |       |  |            |  |            |   |                      |  |                | 
|                                    |       |  |            |  |            |   |                      |  |                | 
|Available-for-sale
      securities | 858   |  | 12         |  | (23        | ) | 847                  |  | 847            | 
|Trading
      securities            | -     |  | -          |  | -          |   | -                    |  | -              | 
|Held-to-maturity
      securities   | -     |  | -          |  | -          |   | -                    |  | -              | 
|                                    |       |  |            |  |            |   |                      |  |                | 
|                                    | 858   |  | 12         |  | (23        | ) | 847                  |  | 847            | 
|                                    |       |  |            |  |            |   |                      |  |                | 
|As
      of December 31, 2001       |       |  |            |  |            |   |                      |  |                | 
|                                    |       |  |            |  |            |   |                      |  |                | 
|Available-for-sale
      securities | 1,089 |  | 111        |  | (43        | ) | 1,157                |  | 1,157          | 
|Trading
      securities            | -     |  | -          |  | -          |   | -                    |  | -              | 
|Held-to-maturity
      securities   | -     |  | -          |  | -          |   | -                    |  | -              | 
|                                    |       |  |            |  |            |   |                      |  |                | 
|                                    | 1,089 |  | 111        |  | (43        | ) | 1,157                |  | 1,157          | 
|                                    |       |  |            |  |            |   |                      |  |                | 
|As
      of December 31, 2000       |       |  |            |  |            |   |                      |  |                | 
|                                    |       |  |            |  |            |   |                      |  |                | 
|Available-for-sale
      securities | 2,613 |  | 801        |  | (97        | ) | 3,317                |  | 3,317          | 
|Trading
      securities            | -     |  | -          |  | -          |   | -                    |  | -              | 
|Held-to-maturity
      securities   | -     |  | -          |  | -          |   | -                    |  | -              | 
|                                    |       |  |            |  |            |   |                      |  |                | 
|                                    | 2,613 |  | 801        |  | (97        | ) | 3,317                |  | 3,317          | 
|                                    |       |  |            |  |            |   |                      |  |                | 

F-53

---

During the
  year ended December 31, 2002, the realized gain on sale of available-for-sale
  securities amounted to EUR 79 million before tax effects (EUR
  765 million for the year ended December 31, 2001 or EUR 855
  million after taking into account the exceptional dividend on
  Gucci shares  see Note 10 -Unconsolidated Investments
  and Other investments)

c)
  Brands & Goodwill


  Amortization
  & depreciation

Under French
  GAAP, LVMH has discontinued amortization of costs assigned to
  brands since 1990; goodwill is amortized over its useful life.

Under US
  GAAP, on J anuary 1, 2002, LVMH adopted SFAS No. 142,Goodwill
  and Other Intangible Assets. Under SFAS
  No. 142, goodwill and indefinite-lived intangible assets would
  no longer be amortized; rather, such assets would be reviewed
  for impairment on an annual basis and whenever events indicate
  that their carrying value may not be recoverable. Should the
  fair value of the goodwill or indefinite-lived intangible assets
  be less than its carrying value, an impairment loss would be
  recognized in an amount equal to the difference. LVMH has completed
  the annual goodwill and indefinite-lived intangible asset impairment
  tests for 2002 as required by SFAS No. 142 and did record for
  US GAAP impairment loss for a total amount of EUR 22 million
  related to goodwill arisen from Urban Decay and Olivier Asia
  acquisitions (see also Note 34.1.f. Acquisitions from companies
  controlling LVMH).

Intangible
  assets that are not deemed to have an indefinite life would
  be amortized over their estimated useful lives.

Additionally,
  goodwill attributed to equity method investments would no longer
  be amortized but would be tested for impairment in accordance
  with APB No. 18,
  The Equity Method of Accounting for Investments in Common Stock.
  Amortization of goodwill charged to income under French GAAP
  has been reversed for US GAAP.

Had SFAS
  No. 142 been applied from January 1, 2000, the reported net
  income (loss) and earnings (loss) per share under US GAAP would
  have been affected as follows:

|                                                              | Year
      ended December 31 |     
|------------------------------------------------------------- | ---------------------------- | ----
|                                                              | NOTE                         | 2002
|                                                              |                              |     
|US
      GAAP Net Income (Loss) as reported (in EUR millions) | 34.2.1                       | 808 
|Add
      back: goodwill amortization                         |                              | -   
|Add
      back: brand amortization (net of tax effect)        |                              | -   
|Add
      back: equity investee goodwill amortization         |                              | -   
|Pro
      forma net income / (loss) (in EUR millions)         |                              | 808 
|                                                              |                              |     
|Net
      earnings / (loss) per share (in EUR)                |                              |     
|Basic
       as reported for French GAAP                     |                              | 1.14
|Basic
       as reported for US GAAP                         | 34.2.5                       | 1.75
|Basic
       pro forma                                       |                              | 1.75
|                                                              |                              |     
|Diluted
       as reported for French GAAP                   |                              | 1.14
|Diluted
       as reported for US GAAP                       | 34.2.5                       | 1.74
|Diluted
       pro forma                                     |                              | 1.74

 Foreign
  Currency Translation

Under French
  GAAP, for all acquisitions prior to January 1, 2000 (i.e. mainly
  DFS), goodwill was translated into euros using the exchange
  rate at the date of the acquisition.

In 2001,
  LVMH determined that the carrying amount of the goodwill related
  to DFS was impaired. In accordance with French GAAP, the Group
  calculated the additional write-down based upon the carrying
  value under the historical exchange rate and the amount is presented
  in the income statement as an unusual item.

Under US
  GAAP, in conformity with SFAS No. 52, the impact of foreign
  currency exchange variations on DFS goodwill would be translated
  each year-end using the exchange rate at the closing date, with
  variations being treated as an adjustment to stockholders
  equity. In addition, under US GAAP, the impairment charge recorded
  in 2001 would have been determined based upon the carrying value
  as translated at the year-end rate, and would have been presented
  as an operating expense.

F-54

---

Presentation

Under French
  GAAP, amortization of goodwill is recorded in the statement
  of income as a non-operating item.

Under US
  GAAP, if applicable, impairment expense would be recorded as
  General and administrative expenses when related
  to consolidated companies and as part of Equity in net
  income (losses) of associated companies when related to
  investments accounted for using the equity method.

Differences
  in goodwill valuation

The value
  assigned in 1987 to the Louis Vuitton shares issued in the context
  of the public exchange offer for 19.3 % of Veuve Clicquot was
  determined on the basis of the fair value attributed to Veuve
  Clicquot shares. Under US GAAP, their value would have been
  determined on the basis of the market value of Louis Vuitton
  shares at the acquisition date. The consideration given would
  have been increased by EUR 57 million and accounted for as goodwill
  and stockholders equity.

Deferred taxes on brands

Under French
  GAAP, deferred tax liabilities on acquired brands are not recognized.

Under US
  GAAP, in conformity with SFAS No. 109, deferred tax liabilities
  on acquired brands would be recorded; however, at the date of
  acquisition, such liabilities would have been recorded against
  additional goodwill. Prior to the application of SFAS No. 142,
  the amortization of such additional goodwill and the reversal
  of the deferred tax liability would have offset each other.
  Starting January 1, 2002 and following the application of SFAS
  142, goodwill is no longer amortized. The impact of the deferred
  tax liability reversal would be EUR 19 million to net income
  presented under deferred taxes caption of the Note
  34.2.1 Adjustments to Net Income. Under US GAAP, as of December
  31, 2002, deferred tax liabilities would have amounted to EUR
  1,044 million.

d)
  Reorganizing costs

Under French
  GAAP, until 2001, LVMH recorded the projected cost of restructuring
  plans, including termination benefits, when the appropriate
  level of Management had approved such plans and had identified
  exit costs on an overall level.

Under US
  GAAP, a provision for restructuring can only be recorded during
  the period when certain conditions are satisfied, including
  the specific identification of activities and when notifications
  are made to the employees affected. As a result, prior to 2001,
  certain of these reserves have been reversed or reclassified
  to goodwill or brands, as appropriate, and the expense recorded
  under French GAAP and US GAAP may have occurred in different
  periods.

e)
  Hedging of exchange and interest rate risks

Under French
  GAAP, the Group revalues its foreign exchange and option contracts
  using the year-end exchange rates. Unrealized gains and losses
  may be deferred if the instruments have been designated as hedge
  instruments by Management.

Gains and
  losses resulting from interest rate hedging contracts (swaps,
  future rate agreements and collars) are accounted for on a pro-rata
  basis over the period of the related contracts. French GAAP
  does not require embedded derivatives to be separated from their
  host contracts.

Under US
  GAAP, and following the adoption of SFAS 133, all derivatives
  including certain derivative instruments embedded in other contracts
  whether designated as a hedging relationship or not, are required
  to be recorded in the balance sheet at fair value. Under SFAS
  133, changes in the fair value of derivatives are recognized
  in earnings except for the effective portion of the change in
  fair value of derivatives that are designated and documented
  as cash-flow hedges at inception.

LVMH does
  not comply with all the formal requirements regarding documentation
  as per the new SFAS 133 to meet the definition of hedging. As
  a result, effective January 1, 2001, all derivative instruments
  held by LVMH, including embedded derivatives, would be recorded
  at their fair value. Changes in fair value of all derivative
  instruments would be recognized in earnings.

The adoption
  of SFAS 133 effective January 1, 2001, resulted in the cumulative
  effect of an accounting change of EUR (116) million, net of
  tax effects, recognized as expenses in the statement of income
  for the year ended December 31, 2001.

F-55

---

f)
  Acquisitions from companies controlling LVMH

Under French
  GAAP, assets purchased from entities controlling LVMH are recorded
  based on estimated fair value.

Under US
  GAAP, these transactions would be recorded based on the historical
  carrying value of the assets for the transferor, in a manner
  similar to a pooling of interests; when applicable, related
  gains are reflected as capital transactions (dividends or stockholders
  equity).

This accounting
  policy applies to the Céline acquisition in 1996, to
  the Belle Jardinière and Le Bon Marché acquisitions
  and Louis Vuitton shares buy-back in 1998 as well as to the
  additional interest in eLuxury in 2001 (refer to 3.1 changes
  in the scope of consolidation).

In 2002,
  when completing the annual goodwill and indefinite-lived intangible
  asset impairment tests for the year, an impairment of EUR 70
  million was identified and recorded for French GAAP purposes
  related to the Céline brand. This impairment is not applicable
  for US GAAP purposes as the Céline brand arose from an
  acquisition under common control and is therefore not recorded
  as an intangible asset under US GAAP.

g)
  Hedging on foreign share acquisitions

Under French
  GAAP, the interest expense and gains or losses arising from
  hedging of acquisitions in foreign currencies are included in
  the acquisition price in the LVMH consolidated financial statements.

Under US
  GAAP, these would be expensed when incurred.

h)
  Stock options

Under French
  GAAP, the Group provides for the difference between the cost
  of shares and theirexercise prices.

Under US
  GAAP, as permitted by SFAS 123 Accounting
  for Stock-Based Compensation,
  LVMH has elected to account for its employee stock option plans
  under the recognition and measurement principles of APB Opinion
  No. 25, Accounting for Stock Issued to Employees
  and related interpretations. Accordingly, stock-based employee
  compensation costs reflected in net income are based on the
  intrinsic value of the options at the date of grant (the market
  price of the underlying common stock on the date of grant less
  the exercise price of the option); expense is recognized over
  the vesting period.

The following
  table illustrates the effect on net income and earnings per
  share if the company had applied the fair value recognition
  provisions of SFAS 123.

|                                                                                                        | Year
      ended December 31 |     
|------------------------------------------------------------------------------------------------------- | ---------------------------- | ----
|                                                                                                        | NOTE                         | 2002
|                                                                                                        |                              |     
|                                                                                                        |                              |     
|US
      GAAP Net Income (Loss) as reported (in EUR millions)                                           | 34.2.1                       | 808 
|                                                                                                        |                              |     
|Add:
      Stock-based employee compensation expense                                                    |                              |     
|included
      in reported net income (loss), net of related tax effects                                |                              | 8   
|                                                                                                        |                              |     
|Deduct:
      Total stock-based employee compensation                                                   |                              |     
|expense
      determined under fair value based method for all awards,
      net of related tax effects |                              | (49 
|                                                                                                        |                              |     
|Pro
      forma net income / (loss) (in EUR millions)                                                   |                              | 767 
|                                                                                                        |                              |     
|Net
      earnings / (loss) per share (in EUR)                                                          |                              |     
|Basic
       as reported for French GAAP                                                               |                              | 1.14
|Basic
       as reported for US GAAP                                                                   | 34.2.5                       | 1.75
|Basic
       pro forma                                                                                 |                              | 1.66
|                                                                                                        |                              |     
|Diluted
       as reported for French GAAP                                                             |                              | 1.14
|Diluted
       as reported for US GAAP                                                                 | 34.2.5                       | 1.74
|Diluted
       pro forma                                                                               |                              | 1.65

The fair
  value of each option grant is estimated on the date of grant
  using the Black-Scholes option-pricing model with the following
  weighted-average assumptions used the grants:

F-56

---

|                              | Year
      ended December 31 |  
|----------------------------- | ---------------------------- | -
|                              | 2002                         |  
|                              |                              |  
|Expected
      Life           | 5.5
      years              |  
|Volatility                    | 40.00                        | %
|Dividend
      Yield          | 1.50                         | %
|Risk-free
      interest rate | 4.75                         | %

i)
  Repackaged notes

LVMH initially
  recorded these notes in the balance sheet at EUR 762 million
  which represents the net proceeds initially received (see Note
  18). Under US GAAP, these amounts would have been shown separately,
  as non-current asset and liability for EUR 228 million and EUR
  992 million respectively. At December 31, 2002 the non-current
  asset and liability would amount to EUR 770 million (EUR 708
  million in 2001, EUR 646 million in 2000) and EUR 992 million
  (for the three years) respectively.

j)
  Tax losses carried forward and deferred taxes

Deferred
  taxes are included on the above adjustments to conform to US
  GAAP.

LVMH's policy
  for accounting for income taxes is substantially in accordance
  with SFAS 109 Accounting for income taxes. However,
  under French GAAP, deferred tax assets arising from tax losses
  are not recognized when their recovery is deemed not probable.

Under US
  GAAP, deferred income tax assets on tax losses carried forward
  would have been recorded, but would have been completely offset
  by recorded valuation allowances.

k)
  Earnings per share

The calculation
  of earnings per share under SFAS 128, effective in 1997, is
  consistent with the method used by LVMH as described in Note
  2.19, except that net income per share would be presented under
  US GAAP rather than earnings per share before amortization of
  goodwill and unusual items. Additionally, the earnings per share
  calculations adjusted for US GAAP include an adjustment to the
  weighted-average shares outstanding for the differences between
  US GAAP and French GAAP in accounting for Treasury shares.

l)
  Unusual Items

Under French
  GAAP, income and expense items that are material and are of
  exceptional nature are recorded as unusual items, net of tax
  and minority interest effects.

Under US
  GAAP, some of these items would be included in income from operations
  or financial expenses.

There are
  no unusual items reported in the statement of income for the
  year ended December 31, 2002. The most significant unusual items
  that would have been included in income from operations under
  US GAAP in 2001 were:

- Impairment
    charge related to DFS goodwill of EUR 323 million;
- Impairment
    of Phillips goodwill and other assets of EUR 141 million;
    and,
- Restructuring
    expenses related to the Selective Retailing business group
    of EUR 385 million.

m)
  Other income or expense, net

Under French
  GAAP, other income and expense comprises items that due to their
  nature or frequency may not be considered as inherent to LVMH
  main activities.

Under US
  GAAP, some of these items would be classified as operating income
  or expense.

F-57

---

n)
  Accounting for shipping and handling costs

Under French
  GAAP, amounts paid by customers for shipping and handling costs
  are included in revenue. Actual costs for shipping and handling
  are included in marketing and selling expenses.

Under US
  GAAP, these expenses should be classified as costs of sales,
  and amounted to approximately EUR 71 million, EUR 71 million,
  and EUR 69 million for the years ending December 31, 2002, 2001
  and 2000, respectively.

o)
  Accounting for slotting fees and cooperative advertising

Under French
  GAAP, these expenses are included in marketing and selling expenses.

Under US
  GAAP, these amounts would be recorded as a reduction of revenues,
  and amounted to EUR 79 million, EUR 77 million and EUR 64 million
  for the years ending December 31, 2002, 2001 and 2000, respectively.

p)
  Comprehensive income

Comprehensive
  income is not a concept addressed by French GAAP. Under US GAAP,
  in accordance with SFAS No. 130Reporting
  Comprehensive Income, comprehensive
  income would include all non-owner changes in stockholders
  equity.

Under US
  GAAP, comprehensive income would include, in addition to net
  income:

|- | movements
      in cumulative translation adjustment;                                                                                                                                                                                                                          
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | unrealized
      gains or losses, net of tax effect on available-for-sale
      securities, until realized (except forthe
      net effects of other-than-temporary declines in fair value
      below the cost basis, which would becharged
      to the statement of income);
|- | movements
      in fair value of the derivative instruments designated as
      cash-flow hedges;                                                                                                                                                                              
|- | equity
      adjustments for additional minimum pension liability not
      charged to the statement of incomeyet.                                                                                                                                                             

Under US
  GAAP, the components of accumulated other comprehensive income
  (OCI) balances would be as follows:

|                                   | Foreign
      currency |   | Unrealized
      gains and   |   | Additional |  
|---------------------------------- | ---------------------- | - | ---------------------------- | - | ---------- | -
|(EUR
      million)                | translation            |   | (losses)
      on available- |   | minimum    |  
|                                   |                        |   | for-sale
      securities    |   | liability  |  
|Year
      ended December 31, 2002 |                        |   |                              |   |            |  
|                                   |                        |   |                              |   |            |  
|Pre-tax
      amount               | 374                    |   | (11                          | ) | (2         | )
|Tax
      (expense) / benefit      | (1                     | ) | 4                            |   | -          |  
|                                   |                        |   |                              |   |            |  
|Net
      accumulated OCI          | 373                    |   | (7                           | ) | (2         | )
|                                   |                        |   |                              |   |            |  
|Year
      ended December 31, 2001 |                        |   |                              |   |            |  
|                                   |                        |   |                              |   |            |  
|Pre-tax
      amount               | 669                    |   | 68                           |   | -          |  
|Tax
      (expense) / benefit      | -                      |   | (16                          | ) | -          |  
|                                   |                        |   |                              |   |            |  
|Net
      accumulated OCI          | 669                    |   | 52                           |   | -          |  
|                                   |                        |   |                              |   |            |  
|Year
      ended December 31, 2000 |                        |   |                              |   |            |  
|                                   |                        |   |                              |   |            |  
|Pre-tax
      amount               | 547                    |   | 704                          |   | -          |  
|Tax
      (expense) / benefit      | -                      |   | (25                          | ) | -          |  
|                                   |                        |   |                              |   |            |  
|Net
      accumulated OCI          | 547                    |   | 679                          |   | -          |  
|                                   |                        |   |                              |   |            |  

F-58

---

34.2
  Conversion to US GAAP

The effects
  of differences between accounting principles adopted by LVMH
  and those generally accepted in the United States are presented
  on a gross basis with a separate adjustment for taxes as follows:

34.2.1
  Adjustments to Net Income

|                                                                         | Ref | 2002                 |   | 2001   |   | 2000 |  
|------------------------------------------------------------------------ | --- | -------------------- | - | ------ | - | ---- | -
|                                                                         |     |                      |   |        |   |      |  
|                                                                         |     | (EUR
      millions) |  
|                                                                         |     |                      |   |        |   |      |  
|Net
      Income, as reported                                            |     | 556                  |   | 10     |   | 722  |  
|US
      GAAP adjustments:                                               |     |                      |   |        |   |      |  
|Treasury
      shares                                                    | (a) | (17                  | ) | 304    |   | (116 | )
|Available-for-sale
      securities                                      | (b) | (100                 | ) | (137   | ) | (49  | )
|Brand
      amortization                                                 | (c) | 26                   |   | (88    | ) | (64  | )
|Goodwill                                                                 | (c) | 240                  |   | (778   | ) | (23  | )
|Reorganizing
      costs                                                 | (d) | -                    |   | (196   | ) | (83  | )
|Hedging
      of exchange and interest rate risks                        | (e) | 109                  |   | (128   | ) | 490  |  
|Acquisitions
      from companies controlling LVMH                       | (f) | 3                    |   | 13     |   | 13   |  
|Hedging
      on foreign share acquisitions                              | (g) | -                    |   | 2      |   | 34   |  
|Stock
      options plans                                                | (h) | 6                    |   | (15    | ) | (5   | )
|Other                                                                    |     | 16                   |   | (26    | ) | 25   |  
|Deferred
      taxes                                                     |     | (31                  | ) | 23     |   | (71  | )
|                                                                         |     |                      |   |        |   |      |  
|Net
      Income as adjusted for US GAAP                                 |     | 808                  |   | (1,016 | ) | 873  |  
|                                                                         |     |                      |   |        |   |      |  
|Other
      Comprehensive Income (OCI)                                   |     |                      |   |        |   |      |  
|Unrealized
      gains or losses on securities                           | (b) | 7                    |   | 30     |   | (568 | )
|Reclassification
      adjustments for gains realized in income          |     | (66                  | ) | (657   | ) | 6    |  
|Foreign
      currency translation adjustment                            |     | (296                 | ) | 129    |   | 179  |  
|Additional
      minimum liability adjustment                            |     | (2                   | ) | -      |   | -    |  
|Reclassification
      for translation adjustment realized in net income |     | -                    |   | (7     | ) | -    |  
|                                                                         |     |                      |   |        |   |      |  
|                                                                         |     |                      |   |        |   |      |  
|Comprehensive
      Income                                               |     | 451                  |   | (1,521 | ) | 490  |  
|                                                                         |     |                      |   |        |   |      |  

34.2.2
  Adjustments to Income from Operations

|                                                      | Ref |  | 2002                 |   | 2001  |   | 2000  |  
|----------------------------------------------------- | --- |  | -------------------- | - | ----- | - | ----- | -
|                                                      |     |  |                      |   |       |   |       |  
|                                                      |     |  | (EUR
      millions) |  
|Income
      from Operations, as reported             |     |  | 2,008                |   | 1,560 |   | 1,959 |  
|Reclassification
      from Other Income or Expense   | (m) |  | (197                 | ) | (139  | ) | (74   | )
|Reclassification
      from unusual items             |     |  | -                    |   | (929  | ) | (114  | )
|Goodwill
      amortization and impairment            | (c) |  | (22                  | ) | (938  | ) | (164  | )
|Brand
      amortization                              | (c) |  | 26                   |   | (88   | ) | (64   | )
|Reorganizing
      costs                              | (d) |  | -                    |   | (196  | ) | (83   | )
|Acquisitions
      from companies controlling LVMH    | (f) |  | 3                    |   | 13    |   | 13    |  
|Stock
      options plans                             | (h) |  | 6                    |   | (15   | ) | (5    | )
|Other                                                 |     |  | 16                   |   | (25   | ) | 24    |  
|                                                      |     |  |                      |   |       |   |       |  
|Income
      from Operations, as adjusted for US GAAP |     |  | 1,840                |   | (757  | ) | 1,492 |  
|                                                      |     |  |                      |   |       |   |       |  

F-59

---

34.2.3
  Adjustments to components of stockholders equity

Year
  ended December 31, 2002

|                                                         |     | Common | Treasury |   | Additional            | Retained |   | Accumulated |   |         |      
|-------------------------------------------------------- | --- | ------ | -------- | - | --------------------- | -------- | - | ----------- | - | ------- | -----
|(EUR
      millions)                                     | Ref | stock  | shares   |   | paid-in
      capital | earnings |   | OCI         |   | Total   |      
|                                                         |     |        |          |   |                       |          |   |             |   |         |      
|As
      reported for French GAAP at December 31, 2002   |     | 147    | (16)     |   | 1,736                 | 5,425    |   | (222        | ) | 7,070   |      
|                                                         |     |        |          |   |                       |          |   |             |   |         |      
|US
      GAAP Adjustments:                               |     |        |          |   |                       |          |   |             |   |         |      
|Treasury
      shares                                    | (a) |        | (1,081   | ) |                       | 174      |   |             |   | (907    | )    
|Available-for-sale
      securities                      | (b) |        |          |   |                       | (214     | ) | (11         | ) | (225    | )    
|Brand
      amortization                                 | (c) |        |          |   |                       | (413     | ) | 7           |   | (406    | )    
|Goodwill                                                 | (c) |        |          |   |                       | 282      |   | (5          | ) | **277** |      
|DFS
      impairment & cumulative translation adjustment | (c) |        |          |   |                       | (816     | ) | 589         |   | (227    | )    
|Hedging
      of exchange and interest rate risks        | (e) |        |          |   |                       | 181      |   |             |   | **181** |      
|Acquisitions
      from companies controlling LVMH       | (f) |        |          |   |                       | (1,039   | ) | 5           |   | (1,034  | )    
|Stock
      options plans                                | (h) |        |          |   |                       | 24       |   |             |   | **24**  |      
|Other                                                    |     |        |          |   |                       | -        |   | (2          | ) | **(2**  | **)**
|Deferred
      Tax                                       |     |        |          |   |                       | 53       |   | 3           |   | **56**  |      
|As
      adjusted for US GAAP at December 31, 2002       |     | 147    | (1,097   | ) | 1,736                 | 3,657    |   | 364         |   | 4,807   |      
|                                                         |     |        |          |   |                       |          |   |             |   |         |      
|                                                         |     |        |          |   |                       |          |   |             |   |         |      
|Year
      ended December 31, 2001                      
|                                                         |     |        |          |   |                       |          |   |             |   |         |      
|                                                         |     | Common | Treasury |   | Additional            | Retained |   | Accumulated |   |         |      
|(EUR
      millions)                                     | Ref | stock  | shares   |   | paid-in
      capital | earnings |   | OCI         |   | Total   |      
|                                                         |     |        |          |   |                       |          |   |             |   |         |      
|As
      reported for French GAAP at December 31, 2001   |     | 147    | (103     | ) | 1,736                 | 5,261    |   | (140        | ) | 6,901   |      
|                                                         |     |        |          |   |                       |          |   |             |   |         |      
|US
      GAAP Adjustments:                               |     |        |          |   |                       |          |   |             |   |         |      
|Treasury
      shares                                    | (a) |        | (1,707   | ) |                       | 343      |   |             |   | (1,364  | )    
|Available-for-sale
      securities                      | (b) |        |          |   |                       | (112     | ) | 68          |   | (44     | )    
|Brand
      amortization                                 | (c) |        |          |   |                       | (439     | ) |             |   | (439    | )    
|Goodwill                                                 | (c) |        |          |   |                       | 42       |   |             |   | **42**  |      
|DFS
      impairment & cumulative translation adjustment | (c) |        |          |   |                       | (816     | ) | 816         |   | **-**   |      
|Hedging
      of exchange and interest rate risks        | (e) |        |          |   |                       | 72       |   |             |   | **72**  |      
|Acquisitions
      from companies controlling LVMH       | (f) |        |          |   |                       | (954     | ) |             |   | (954    | )    
|Other                                                    |     |        |          |   |                       | (11      | ) | (7          | ) | (18     | )    
|Deferred
      Tax                                       |     |        |          |   |                       | (105     | ) | (16         | ) | (121    | )    
|As
      adjusted for US GAAP at December 31, 2001       |     | 147    | (1,810   | ) | 1,736                 | 3,281    |   | 721         |   | 4,075   |      
|                                                         |     |        |          |   |                       |          |   |             |   |         |      

F-60

---

Year
  ended December 31, 2000

|                                                       |     | Common | Treasury |   | Additional            |  | Retained |   | Accumulated |   |        |  
|------------------------------------------------------ | --- | ------ | -------- | - | --------------------- |  | -------- | - | ----------- | - | ------ | -
|(EUR
      millions)                                   | Ref | stock  | shares   |   | paid-in
      capital |  | earnings |   | OCI         |   | Total  |  
|                                                       |     |        |          |   |                       |  |          |   |             |   |        |  
|As
      reported for French GAAP at December 31, 2000 |     | 147    | (301     | ) | 1,735                 |  | 5,583    |   | (133        | ) | 7,031  |  
|                                                       |     |        |          |   |                       |  |          |   |             |   |        |  
|US
      GAAP Adjustments:                             |     |        |          |   |                       |  |          |   |             |   |        |  
|Treasury
      shares                                  | (a) |        | (1,446   | ) |                       |  | -        |   |             |   | (1,446 | )
|Available-for-sale
      securities                    | (b) |        |          |   |                       |  | 25       |   | 704         |   | 729    |  
|Brands
      amortization                              | (c) |        |          |   |                       |  | (333     | ) |             |   | (333   | )
|Goodwill                                               | (c) |        |          |   |                       |  | 43       |   |             |   | 43     |  
|DFS
      cumulative translation adjustment            | (c) |        |          |   |                       |  | (39      | ) | 680         |   | 641    |  
|Reorganization
      costs                             | (d) |        |          |   |                       |  | 195      |   |             |   | 195    |  
|Hedging
      of exchange and interest rate risks      | (e) |        |          |   |                       |  | (2       | ) |             |   | (2     | )
|Acquisitions
      from companies controlling LVMH     | (f) |        |          |   |                       |  | (922     | ) |             |   | (922   | )
|Hedging
      on foreign currency transactions         | (g) |        |          |   |                       |  | 200      |   |             |   | 200    |  
|Other                                                  |     |        |          |   |                       |  | (8       | ) |             |   | (8     | )
|Deferred
      Tax                                     |     |        |          |   |                       |  | (122     | ) | (25         | ) | (147   | )
|As
      adjusted for US GAAP at December 31, 2000     |     | 147    | (1,747   | ) | 1,735                 |  | 4,620    |   | 1,226       |   | 5,981  |  
|                                                       |     |        |          |   |                       |  |          |   |             |   |        |  

34.2.4
  Adjustments to the statement of cash-flows

Under French
  GAAP, cash equivalents as presented in the statement of cash-flows
  are net of bank overdrafts, and include certain available-for-sale
  securities and unrestricted time deposits over 3 months. Additionally,
  under French GAAP, certain cash-flow activity related to other
  investments is presented with financing activities. Adjustments
  required to conform to the US GAAP are presented below:

2002
      
      2001
      
      2000(EUR
        millions)Net
        Cash Flows  Operating ActivitiesAs
        reported and US GAAP
      1,954
      
      574
      
      859Net
        Cash Flows  Investing ActivitiesAs
        reported
      (724
      )
      (894
      )
      176Adjustments:Available
        for sale securities
      406
      
      (202
      )
      (91
      )Investments
      182
      
      880
      
      (1,071
      )Bank
        overdrafts
      (40
      )Time
        Deposits over 3 months
      (67
      )
      3
      
      7Net
        Investing Cash Flows US GAAP
      (243
      )
      (213
      )
      (979
      )Net
        Cash Flows  Financing ActivitiesAs
        reported
      (1,546
      )
      566
      
      (821
      )Adjustments:Investments
      (182
      )
      (880
      )
      1,071Bank
        Overdrafts
      (10
      )
      54
      
      48Net
        Financing Cash Flows US GAAP
      (1,738
      )
      (260
      )
      298Effect
        of exchange rate changesAs
        reported
      (18
      )
      2
      
      (22
      )Adjustments:Available
        for sale securities
      4Bank
        overdrafts
      (10
      )Effect
        of exchange rate changes US GAAP
      (24
      )
      2
      
      (22
      )Cash
        and Cash EquivalentsAs
        reported
      544
      
      878
      
      630Adjustments:Bank
        overdrafts
      298
      
      358
      
      304Available
        for sale securities
      (31
      )
      (441
      )
      (239
      )Time
        Deposits over 3 months
      (76
      )
      (9
      )
      (12
      )Cash
        and Cash Equivalents  US GAAP
      735
      
      786
      
      683


F-61


---

34.2.5
  Adjustments to calculation of Earnings per share

2002
      
      2001
      
      2000Net
        Income (EUR millions)As
        reported
      556
      
      10
      
      722US
        GAAP adjustments
      252
      
      (1,026
      )
      151Net
        Income as adjusted to US GAAP
      808
      
      (1,016
      )
      873Earnings
        per ShareNumber
        of common shares and common share equivalents (1)As
        reported
      488,852,554
      
      488,064,659
      
      484,800,930Less
        treasury shares recorded as assets
      (26,165,156
      )
      (29,908,889
      )
      (25,351,807
      )Number
        of common shares and common share equivalents  US
        GAAP
      462,687,398
      
      458,155,770
      
      459,449,123Earnings
        per Share-US GAAP
      1.75
      
      (2.22
      )
      1.90Number
        of common shares and share equivalents after dilution
        (1)As
        reported
      488,852,554
      
      488,072,374
      
      484,886,474Less
        treasury shares recorded as assetsand
        dilutive effect of stock options
      (23,780,341
      )
      (29,908,889
      )
      (25,351,807
      )Number
        of common shares and shareequivalents
        after dilution  US GAAP
      465,072,213
      
      458,163,485
      
      459,534,667Fully
        Diluted Earnings per Share-US GAAP
      1.74
      
      (2.22
      )
      1.90(1)
        Figures have been adjusted to reflect the five-for-one
        stock split of July 2000.


34.3
  Additional information with respect to US GAAP

34.3.1
  New accounting standards

Accounting
  for Stock-Based Compensation  Transition and Disclosure

In December
  2002, the FASB issued SFAS No. 148,
  Accounting for Stock-Based Compensation  Transition and
  Disclosure. This standard amends SFAS
  No. 123 Accounting for Stock-Based Compensation, to provide
  alternative methods of transition to SFAS 123s fair value
  of accounting for stock-based employee compensation. It also
  amends the disclosure provisions of SFAS 123 to require prominent
  disclosures in the summary of significant account policies of
  the effects of an entitys accounting policy with respect
  to stock-based employee compensation on reported net income
  and earnings per share in annual financial statements. SFAS
  148s amendment of the transition and annual disclosure
  requirements are effective for fiscal years ending after December
  15, 2002. Refer to note 34.1.h. for disclosures related to stock-based
  compensation. The Company intends to continue to account for
  stock-based compensation based on the provisions of APB Opinion
  No. 25.

Guarantors
  Accounting and Disclosure Requirements for Guarantees, Including
  Indirect Guarantees of Indebtedness of Others

In November
  2002, the FASB announced the issuance of Interpretation No.
  45,Guarantors
  Accounting and Disclosure Requirements for Guarantees, Including
  Indirect Guarantees of Indebtedness of Others,
  which expands on the accounting guidance of SFAS No. 5, 57 and
  107 and incorporates without change the provisions of FASB Interpretation
  No. 34, which has been superseded by this interpretation. Given
  observed differences in practice, this Interpretation clarifies
  the requirements for a guarantors accounting and interim
  and annual financial statement disclosures of certain guarantees
  issued and outstanding. It also clarifies that a guarantor is
  required to recognize, at the inception of a guarantee, a liability
  for the fair value of the obligation undertaken in issuing the
  guarantee. This Interpretation does not prescribe a specific
  approach for subsequently measuring the guarantors recognized
  liability over the term of the related guarantee. The incremental
  disclosure requirement in this Interpretation are effective
  for financial statements of interim or annual periods ending
  after December 15, 2002. The initial recognition and measurement
  provisions of this Interpretation are applicable to guarantees
  issued or modified after December 31, 2002. LVMH is currently
  reviewing the initial recognition and measurement provisions
  of this interpretation to measure the potential impact on its
  results of operations and financial position.

F-62

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Accounting
  for Costs Associated with Exit or Disposal Activities

In June 2002,
  the FASB issued SFAS No. 146Accounting
  for Costs Associated with Exit or Disposal Activities.
  The statement addresses the recognition, measurement, and reporting
  of costs that are associated with exit and disposal activities,
  and nullifies EITF 94-3 Liability Recognition for Certain
  Employee Termination Benefits and Other Costs to exit an Activity
  (including Certain Costs Incurred in a Restructuring). Under
  SFAS No. 146, the cost associated with an exit or disposal activity
  is recognized in the periods in which it is incurred rather
  than at the date the company committed to the exit plan. This
  statement becomes effective for exit or disposal activities
  initiated after December 31, 2002, with earlier application
  encouraged. LVMH does not anticipate that adoption of SFAS No.
  146 will have a material impact on its results of operations
  or its financial position.

Rescission
  of FASB statements 4, 44 and 64, Amendment of FASB statement
  13 and Technical corrections

In April
  2002, the FASB issued SFAS No. 145Rescission
  of SFAS No. 4, 44 and 64, Amendment of SFAS No. 13 and Technical
  corrections. This statement amends SFAS
  13, Accounting for leases, to eliminate an inconsistency between
  the required accounting for certain lease modifications that
  have economic effects that are similar to sale-leaseback transactions.
  The rescission of SFAS No. 4 is effective for fiscal years beginning
  after May 15, 2002. The other provisions are effective for transactions
  occurring on or after May 15, 2002. The adoption of the provisions
  of this statement relating to 2002 had no material impact on
  LVMHs financial position or on its results of operations
  and cash flows as of December 31, 2002. LVMH does not anticipate
  that adoption of the extinguishment of debt (SFAS No. 4) will
  have a material impact on its results of operations or its financial
  position.

Accounting
  for Asset Retirement Obligation

In June 2001,
  the FASB issued SFAS No. 143,Accounting
  for Asset Retirement Obligations. This
  standard provides the accounting for the cost of legal obligations
  associated with the retirement of long-lived assets. SFAS 143
  requires that companies recognize the fair value of a liability
  for asset retirement obligations in the period in which the
  obligations are incurred and capitalize that amount as a part
  of the book value of the long-lived asset. That cost is then
  depreciated over the remaining life of the underlying long-lived
  asset. LVMH is required to adopt SFAS No. 143 effective January
  1, 2003. LVMH does not expect the impact of the adoption of
  SFAS No. 143 to have a material effect on the results of its
  operations or on its financial position.

34.3.2
  Proportionally Consolidated Companies

In July 2000,
  LVMH acquired with the Prada Group a joint controlling interest
  in Fendi. Under French GAAP, the investment in Fendi was consolidated
  on a proportionate basis from its inceptions.

In December
  2001, LVMH bought out Pradas share in the Fendi investment,
  thereby acquiring a controlling interest in Fendi. As a result
  of this additional investment in December 2001, Fendi has been
  accounted for as a fully consolidated subsidiary of LVMH under
  French GAAP from December 31, 2001.

In 2002,
  LVMH does not proportionally consolidate any significant investment
  in accordance with French GAAP.

Summary financial
  information for the investment in Fendi accounted for by the
  proportional consolidation method was as follows:

|                                        | 2002                 |  | 2001 |   | 2000 |  
|--------------------------------------- | -------------------- |  | ---- | - | ---- | -
|                                        |                      |  |      |   |      |  
|                                        | (EUR
      millions) | 
|                                        |                      |  |      |   |      |  
|Current
      Assets                    | -                    |  |      |   | 982  |  
|Non-current
      Assets                | -                    |  |      |   | 54   |  
|Current
      Liabilities               | -                    |  |      |   | 573  |  
|Non-current
      Liabilities           | -                    |  |      |   | -    |  
|Minority
      Interests                | -                    |  |      |   | 466  |  
|                                        |                      |  |      |   |      |  
|Net
      Sales                         | -                    |  | 286  |   | 154  |  
|Gross
      Margin                      | -                    |  | 130  |   | 88   |  
|Net
      Income                        | -                    |  | (13  | ) | (3   | )
|                                        |                      |  |      |   |      |  
|Net
      Cash Provided From (Used In): | -                    |  |      |   |      |  
|Operating
      Activities              | -                    |  |      |   | (3   | )
|Investing
      Activities              | -                    |  |      |   | (184 | )
|Financing
      Activities              | -                    |  |      |   | 187  |  

F-63

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34.3.3
  Additional disclosures required under US GAAP

Use
  of estimates

The preparation
  of financial statements in conformity with generally accepted
  accounting principles requires management to make estimates
  and assumptions that affect the amounts reported in the financial
  statements and accompanying notes. Actual results might differ
  from those estimates.

Concentration
  of credit risk

LVMH maintains
  cash and cash equivalents, derivative and other instrument securities
  with various financial institutions and limits its concentration
  of these financial instruments with any one institution, and
  periodically reviews the credit standing of these institutions.

LVMH has
  a large and diverse customer base across various industries,
  thereby minimizing the credit risk of any one customer to LVMHs
  accounts receivable amounts.

Advertising
  and Promotion costs

Advertising
  and promotion costs are expensed as incurred for both French
  and US GAAP. These costs amounted to EUR 1,443 million, EUR
  1,371 million, and EUR 1,331 million for the years ending December
  31, 2002, 2001, and 2000, respectively.

Fair
  Value of Financial Instruments

The following
  table presents the carrying amounts as presented in the consolidated
  balance sheet under French GAAP and estimated fair values of
  LVMHs financial instruments at December 31, 2002, 2001
  and 2000:

|                                 | 2002     |     | 2001  |   | 2000     |   
|-------------------------------- | -------- | --- | ----- | - | -------- | --
|                                 |          |     |       |   |          |   
|(EUR
      millions)             | Carrying |     | Fair  |   | Carrying |   
|                                 | Amount   |     | Value |   | Amount   |   
|                                 |          |     |       |   |          |   
|Short-term
      investments     | 60       |     | 61    |   | 622      |   
|Unconsolidated
      investments | 869      |     | 738   |   | 1,386    |   
|Forward
      exchange contracts | -        |     | 7     |   | -        |   
|Currency
      options           |          |     |       |   |          |   
|-
      Purchase                 | 39       |     | 256   |   | 14       |   
|-
      Sale                     |          |     |       |   | -        |   
|Interest
      rate swaps        | 27       |     | 31    |   | 34       |   
|Interest
      rate options      | 10       |     | 3     |   | 12       |   
|Embedded
      derivatives       | -        | (16 | )     | - |          | 11
|Equity
      options             | -        |     | -     |   | -        |   

The following
  methods and assumptions were used to estimate the fair value
  of each class of financial instruments for which it is practicable
  to estimate that value:

- Cash,
    cash equivalents and accounts receivableThe carrying values of cash, cash equivalents
    and trade accounts receivable approximate fair value due to
    the relatively short maturity of these instruments.
- Short-term
    investmentsShort-term investments consist of debt and equity
    securities. The fair value of listed securities and mutual
    funds are valued based on current market rates. Debt securities
    are valued based on discounted cash flows. For unlisted securities,
    the fair value is estimated based on recent share prices,
    earnings or cash flows.
- Unconsolidated
    investmentsThe fair value of unconsolidated investments
    is estimated according to such criteria as the stock price,
    earnings or cash flows.
- Short-term
    borrowingsThe carrying values of short-term borrowings
    approximate fair value due to the relatively short maturity
    of these instruments and their variable rate nature.

F-64

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- Long-term
    debtThe estimated fair value of long-term debt is
    based upon on the discounted value of contractual cash flows.
    The discount rate is estimated using the rates currently offered
    for debt with similar remaining maturity dates. The long-term
    debt whose carrying amount is EUR 4,828 million at December
    31, 2002 (5,640 million at December 31, 2001) has an estimated
    fair value of EUR 4,763 million (5,645 million in 2001).
- Repackaged
    notesThe fair value is estimated based upon the amount
    LVMH would have to pay to terminate the notes.The repackaged notes whose carrying amount is
    EUR 222 million at December 31, 2002 (284 million at December
    31, 2001) has an estimated fair value of EUR 266 million (EUR
    249 million in 2001).
- Derivative
    financial instrumentsThe fair value of derivative financial instruments
    have been estimated on the basis of available market prices
    or using internal valuation techniques, such as present value
    of future cash flows or Black & Scholes models. However,
    the methods and assumptions followed are inherently judgmental.
    Thus estimated fair values do not necessarily reflect amounts
    that would be received or paid in case of immediate settlement
    of these instruments.

Guarantees,
  including indirect guarantees of indebtedness and others

Guarantees
  issued prior to January 1, 2003 are not subject to liability
  recognition but are subject to expanded disclosure requirements.
  Note 30 already disclosed information on group commitments and
  guarantees and notably with respect to fixed assets, investments
  and raw material purchase commitments.

LVMH guaranteed
  bank debt and finance lease obligations of De Beers LV Ltd.,
  a company accounted for using the equity method. Expiration
  dates vary, or guarantees will terminate on payment and/or cancellation
  of the obligation. A payment would be triggered by failure of
  the guaranteed party to fulfil its obligation covered by the
  guarantee. There are no recourse provisions and no assets are
  held as collateral for these guarantees. Further details with
  respect to these guarantees is disclosed under in the section
  related party transactions below.

The guarantees
  disclosed in Note 30 do not include those securing future obligations
  already disclosed in the financial statements such as subsidiaries
  debt or subsidiaries commitments disclosed elsewhere. At December
  31, 2002, the parent company LVMH SA had fully and unconditionally
  warranted for certain of its subsidiaries for an aggregate amount
  of EUR 2,936 million. Those guarantees mature with the term
  of the related credit lines. LVMH Inc, a subsidiary of LVMH
  SA also guaranteed the contingent rent of certain of its subsidiaries
  for an aggregate amount of EUR 76 million.

Related
  party transactions

On May 12,
  1999, the LVMH Board authorized the execution of a services
  agreement with Montaigne Participations and Gestion, pursuant
  to which Montaigne Participations and Gestion provides to LVMH
  the services of experienced staff, qualified in development,
  financing, corporate law and real estate. The annual fee paid
  by LVMH to Montaigne Participations and Gestion pursuant to
  this services agreement in 2002 amounted to EUR 2.5 million;
  the amount for 2003 has been increased to EUR 3.4 million (excluding
  VAT).

Since 1999,
  Christian Dior Couture has rented offices located at avenue
  Montaigne, 75008 Paris (522 m2) to LVMH. In 2002, the annual
  rent paid by LVMH for these offices was EUR 231,461 (excluding
  VAT), increased by rental charges of EUR 123,124 (excluding
  VAT).

In 1999,
  LVMH implemented a supplementary retirement plan for the members
  of its Executive Committee, certain of whom are also Directors.
  The financing of such plan is made through contributions by
  LVMH paid to an insurance company.

In 2001,
  Sofidiv UK Ltd, an LVMH subsidiary, formed a 50/50 joint venture,
  De Beers LV Ltd (DBLV) with an entity of the DTC
  (De Beers) Group (DTC). The DBLV Agreements, including
  the DBLV Shareholders Agreement, were signed on January 16,
  2001, and the transaction was closed on July 27, 2001. Under
  the DBLV Shareholders Agreement, LVMH generally guarantees to
  DTC the performance by any LVMH subsidiary of all of such entities
  obligations, commitments and undertakings under the DBLV Agreements.
  This includes a maximum financing by LVMH of DBLV equal to USD
  200 million over ten years.

F-65

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In 2001,
  DBLV entered into a Lease Agreement relating to properties located
  at 45-50 Old Bond Street and 57-60 Piccadilly in London. DTC
  has agreed to guaranty to the lessor the performance by DBLV
  of all its obligations under such Lease Agreement. In consideration
  for DTC guaranteeing DBLVs obligations under the Lease
  Agreement, LVMH has entered into an Indemnity Agreement pursuant
  to which LVMH undertakes to indemnify DTC up to one half of
  its liabilities under the Lease Agreement.

In December
  2001, LVMH granted a guarantee to Crédit Lyonnais regarding
  any commitment which may be made by LVMH BV to Crédit
  Lyonnais pursuant to the Sale, Assignment and Earn Out Agreement
  dated December 17, 2001 between LVMH, LVMH BV and Crédit
  Lyonnais relating to the sale of LVMH BVs shareholding
  in Gucci.

In 2002,
  DBLV entered into a Lease Agreement relating to properties located
  in the St Regis Hotel located at Two East 55thStreet, 5th Avenue in New York. LVMH has agreed to
  guaranty to the lessor the performance by DBLV of all of its
  obligations under such Lease Agreement. In consideration for
  LVMH guaranteeing DBLVs obligations under the Lease Agreement,
  DTC has entered into an Indemnity Agreement pursuant to which
  DTC undertakes to indemnify LVMH up to one half of its liabilities
  under the Lease Agreement.

In 2002,
  DBLV entered into a Consulting Agreement with Zman, Inc. pursuant
  to which Iman is to act as DBLVs style icon. In connection
  therewith, LVMH has agreed to guaranty to Zman, Inc. the full
  payment of any sum due by DBLV to Zman, Inc. under the Consulting
  Agreement, up to a maximum amount equal to USD 4 million. In
  consideration for this, DTC has entered into an Indemnity Agreement
  pursuant to which DTC undertakes to indemnify LVMH up to one
  half of its liabilities under the Consulting Agreement and the
  Guaranty.

On March
  6, 2002, the LVMH Board of Directors authorized an agreement
  with Christian Dior SA regarding the provision of certain legal
  services to Christian Dior SA for an annual fixed fee of EUR
  45,750 (VAT excluded).

In March
  2003, LVMH granted a guarantee to the benefit of JP Morgan Chase
  Bank for a maximum amount of USD 14 million in connection with
  a loan made by JP Morgan Chase Bank to Millennium Import LLC.

F-66

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LVMH
  MOET HENNESSY LOUIS VUITTON AND SUBSIDIARIES

Schedule
  II - Valuation and Qualifying Accounts and Reserves

---

(EUR
  millions)

AdditionsDescription
      Balance
        at
      
      Charged
        to
      
      Charged
      
      Deductions
      
      Balance
        atbeginning
      
      costs
        and
      
      to
        other
      
      
      
      end
        of periodof
        period
      
      expenses
      
      accountsAllowance
        for doubtfultrade
        receivablesDecember
        31, 2002
      98
      
      72
      
      23
      
      (64)
      
      129December
        31, 2001
      69
      
      48
      
      4
      
      (23)
      
      98December
        31, 2000
      51
      
      36
      
      6
      
      (23)
      
      69Allowance
        forinventoriesDecember
        31, 2002
      592
      
      230
      
      29
      
      (260)
      
      591December
        31, 2001
      343
      
      175
      
      74
      
      -
      
      592December
        31, 2000
      208
      
      39
      
      96
      
      -
      
      343Allowance
        for treasurystockDecember
        31, 2002
      343
      
      163
      
      -
      
      (332)
      
      174December
        31, 2001
      -
      
      343
      
      -
      
      -
      
      343December
        31, 2000
      -
      
      -
      
      -
      
      -
      
      -Allowance
        for short-term
        investmentsDecember
        31, 2002
      34
      
      4
      
      -
      
      (22)
      
      16December
        31, 2001
      47
      
      25
      
      -
      
      (38)
      
      34December
        31, 2000
      30
      
      17
      
      -
      
      -
      
      47Allowance
        for short-term
        loansDecember
        31, 2002
      3
      
      1
      
      1
      
      -
      
      5December
        31, 2001
      1
      
      3
      
      -
      
      (1)
      
      3December
        31, 2000
      1
      
      -
      
      -
      
      -
      
      1Allowance
        for operating&
        non-operatingreceivablesDecember
        31, 2002
      19
      
      14
      
      (13)
      
      (1)
      
      19December
        31, 2001
      13
      
      5
      
      -
      
      1
      
      19December
        31, 2000
      2
      
      1
      
      11
      
      (1)
      
      13


S-1

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EXHIBIT INDEX

| | 1.     | *Statuts*of
      LVMH as amended to date.                                                                  
| | ------ | ------------------------------------------------------------------------------------------------------------
| |        |                                                                                                             
| | 4(a).  | Partners Agreement
      among LVMH, Diageo plc, Guinness France Holdings S.A. and
      LVMH Fashion       
| |        | Group S.A. dated
      October 1, 2002.                                                                     
| |        |                                                                                                             
| | 4(c)1. | Employment agreement
      between LVMH, S.A. and Mr. Antonio Belloni dated May 14,
      2001.             
| |        |                                                                                                             
| | 4(c)2. | Employment agreement
      between *Moët Hennessy* and Mr. Nicolas Bazire
      dated June 30, 2000 (English
| |        | translation for
      information purposes only).                                                           
| |        |                                                                                                             
| | 4(c)3. | Employment agreement
      between *Moët Hennessy*and Mr. Pierre Godé
      dated June 1, 1992 (English     
| |        | translation for
      information purposes only).                                                           
| |        |                                                                                                             
| | 8.     | List of Subsidiaries.                                                                                       

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