UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934

 

April 29, 2008

 

COMMISSION FILE NO. 1 - 10421

 

LUXOTTICA GROUP S.p.A.

 

 

VIA C. CANTÙ 2, MILAN, 20123 ITALY
(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of

 

Form 20-F or Form 40-F. Form 20-F x Form 40-F o

 

 

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by

 

Regulation S-T Rule 101(b)(1): o

 

 

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by

 

Regulation S-T Rule 101(b)(7): o

 

 

 

Indicate by check mark whether by furnishing the information contained in this Form,

 

the registrant is also thereby furnishing the information to the Commission pursuant to

 

Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes o No x

 

 

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with

 

Rule 12g3-2(b): 82-

 

 

 

 



 

 

Set forth below is the text of a press release issued on April 24, 2008.

 

Luxottica sees strong growth in 1Q08 net sales:

+17% at constant exchange rates, +8% at current exchange rates

 

Milan, Italy — April 24, 2008 — The Board of Directors of Luxottica Group S.p.A. (NYSE: LUX; MTA: LUX), a global leader in the design, manufacturing and distribution of premium fashion and luxury eyewear, convened today in Milan by chairman Leonardo Del Vecchio, approved results as of and for the three-month period ended March 31, 2008(1).

 

Financial highlights for the period in accordance with U.S. GAAP are set forth below. A detailed balance sheet, income statements and other financial tables are attached to this press release.

 

First quarter of 2008(1)

 

millions of euro

 

1Q08

 

Change at current
exchange rates

 

Change at constant
exchange rates

 

 

 

 

 

 

 

Consolidated sales

 

 

 

 

 

 

Group

 

1,398.7

 

+7.6%

 

+16.6%

Wholesale third parties

 

619.6

 

+32.9%

 

+37.6%

Retail

 

779.1

 

–6.5%

 

+4.8%

Comp. Sales Retail(2)

 

 

 

–3.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

 

 

Change
vs. Pro forma(4)

 

 

Group

 

14.8%

 

–80 bps

 

Wholesale

 

24.3%

 

+100 bps

 

 

Retail

 

8.6%

 

–320 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA(3)

 

19.7%

 

–70 bps

 

 

 

 

 

 

 

 

 

 

 

 

Change at current exchange rates

 

Change in US$

EPS (in Euro)

 

0.23

 

–19.6%

 

–8.1%

 - Before trademark amortization(3)

 

0.26

 

–15.3%

 

–3.2%

 

Andrea Guerra, chief executive officer of Luxottica Group, commented: “We are pleased with our overall performance for the first three months of the current year. The Group grew significantly: +17% at constant exchange rates, due to the first effects of the integration of Oakley’s business and to the organic growth of the Group all across the world. In the U.S., we posted a positive quarter also including Oakley’s results for the

 

 

1



 

 

first quarter on a pro forma basis, which is an encouraging indicator for the remainder of the year.

 

“This quarter was characterized by a continued weakness of the U.S. currency, by the slowdown of the North American market and by the  activities necessary to obtain great synergies from the new journey with Oakley. In these circumstances and despite these factors, Group profitability performed well. Earnings per share before trademark amortization in US dollars was just 3% lower than the first quarter of 2007, a great quarter. That confirms an outstanding resilience of the Group to face more complicated macroeconomic trends.

 

“We expect that for the remainder of the year, especially in the second half, our business will have an opportunity to reap to an even greater degree the benefits of its leadership in the market, exploiting Oakley’s seasonality and the new wholesale/retail mix resulting from the integration. We have already implemented several business-specific as well as Group-wide initiatives to further improve our ability to capture and maximize opportunities for growth while further increasing cost controls, confirming a 5% of net sales investment plan for our future.

 

“In the first quarter of 2008, the Group also grew in North America. Net sales for the retail and wholesale segments combined, including Oakley pro forma, grew in US$ by 3% compared to the first quarter of 2007, due to a diversified strategy and a balanced brand portfolio for the retail and wholesale segments. While there is clearly a market slowdown, the severe market fluctuations appear to have been stabilized. We have been able to plan and react to these new conditions. We have been engaged in an important cost-control plan, the purpose of which is to enhance efficiency. This plan allows us to view our prospects for future quarters positively.

 

“Our manufacturing and wholesale segment’s best brands performed very well across all regions. The different positioning of our brand portfolio, the strengths of each brand and our deeply rooted global presence allowed us to post a strong overall growth: +36% at constant exchange rates.

 

“Integration projects with Oakley are moving very quickly, exceeding our expectations. Europe and emerging markets are the regions where we have done the most integration work so far and where we are already reaping the initial results of such work.

 

“These results allow us to confirm our previously announced guidance for FY 2008.”

 

In the first quarter of 2008, our two most important house brands, Ray-Ban and Oakley, posted strong results, as did the first collection of our licensed brand, Tiffany, which was successfully launched first in North America and then in other markets. The launch of 30 new colors of Wayfarer completed the restyling campaign, started last year, for this iconic Ray-Ban model and was well-received by the market. This quarter, Oakley posted double digit sales growth in the U.S. and in other markets. This is the year of the Olympic games and  great product launches which are being well-received by male and female audiences.

 

Luxottica Group’s consolidated net outstanding debt on March 31, 2008, was €2,729 million, reflecting a consolidated net debt to pro forma EBITDA ratio(3) of 2.38x.

 

 

2



 

 

The officer responsible for preparing the company’s financial reports, Enrico Cavatorta, declares, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, that the accounting information contained in this press release corresponds to the document results, books and accounting records.

 

Luxottica Group S.p.A.

Luxottica Group is a global leader in eyewear, with over 6,000 optical and sun retail stores in North America, Asia-Pacific, China, South Africa and Europe and a strong brand portfolio that includes our key house brand, Ray-Ban, the best selling sun and prescription eyewear brand in the world, as well as, among others, license brands Bvlgari, Burberry, Chanel, Dolce & Gabbana, Donna Karan, Polo Ralph Lauren, Prada, Salvatore Ferragamo, Tiffany and Versace, and other key house brands Oakley, Oliver Peoples, Vogue, Persol, Arnette and REVO. In addition to a global wholesale network that touches 130 countries, the Group manages leading retail brands such as LensCrafters and Pearle Vision in North America, OPSM and Laubman & Pank in Asia-Pacific, and Sunglass Hut globally. The Group’s products are designed and manufactured in six Italy-based high-quality manufacturing plants, in the only two China-based plants wholly-owned by a premium eyewear manufacturer, and in manufacturing facilities in the United States acquired as part of the Oakley acquisition. For fiscal year 2007, Luxottica Group (NYSE: LUX; MTA: LUX) posted consolidated net sales of €5 billion. Additional information on the Group is available at www.luxottica.com.

 

Safe Harbor Statement

Certain statements in this press release may constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Such statements involve risks, uncertainties and other factors that could cause actual results to differ materially from those which are anticipated. Such risks and uncertainties include, but are not limited to, the ability to successfully integrate Oakley’s operations, the ability to realize expected synergies from the merger with Oakley, the ability to successfully introduce and market new products, the ability to maintain an efficient distribution network, the ability to predict future economic conditions and changes in consumer preferences, the ability to achieve and manage growth, the ability to negotiate and maintain favorable license arrangements, the availability of correction alternatives to prescription eyeglasses, fluctuations in exchange rates, the ability to effectively integrate other recently acquired businesses, as well as other political, economic and technological factors and other risks and uncertainties described in our filings with the U.S. Securities and Exchange Commission. These forward-looking statements are made as of the date hereof, and we do not assume any obligation to update them.

 

Media and investor relations contacts

Carlo Fornaro
Group Corporate Communications Director
Tel.: +39 (02) 8633 4062
Email: MediaRelations@luxottica.com

 

Alessandra Senici
Group Investor Relations Director
Tel.: +39 (02) 8633 4069
Email: InvestorRelations@Luxottica.com

Luca Biondolillo
Head of International Communications
Tel.: +39 (02) 8633 4668
Email: LucaBiondolillo@Luxottica.com

 

 

 


 


(1) All comparisons, including percentage changes, are between the three-month periods ended March 31, 2008 and 2007.

 

(2) Comparable store sales reflects the change in sales from one period to another that, for comparison purposes, includes in the calculation only stores open in the more recent period that also were open during the comparable prior period, and applies to both periods the average exchange rate for the prior period and the same geographic area.

 

(3) EBITDA, pro forma EBITDA, the ratio of net debt to pro forma EBITDA and EPS before trademark amortization are non-U.S. GAAP measures. For additional disclosure regarding such measures, please refer to the tables attached or to the tables accompanying

the 1Q08 results conference call that the Group’s management will hold this afternoon (presentation available on www.luxottica.com)

 

(4) Pro forma data reflects the inclusion of Oakley, Inc., a subsidiary that was acquired in November 2007, as if it was acquired on January 1, 2007.

 

 

3



 

 

APPENDIX

 

Non-U.S. GAAP Measures

Earnings per share before trademark amortization:

Earnings per share (EPS) before trademark amortization means earnings per share before trademark and other similar intangible asset amortization expense, net of taxes, per share.  The Company believes that EPS before trademark amortization is useful to both management and investors in evaluating the Company’s operating performance and prospects compared to that of other companies in its industry.  Our calculation of EPS before trademark amortization allows us to compare our earnings per share with those of other companies without giving effect to the accounting effects of the amortization of the Company’s trademarks and other similar intangible assets, which may vary for different companies for reasons unrelated to the overall operating performance of a company’s business.

 

EPS before trademark amortization is not a measure of performance under accounting principles generally accepted in the United States (U.S .GAAP).  We include it in this presentation in order to:

 

- improve transparency for investors;

- assist investors in their assessment of the Company’s operating performance;

- ensure that these measures are fully understood in light of how the Company evaluates its operating results;

- properly define the metrics used and confirm their calculation; and

- share these measures with all investors at the same time.

 

EPS before trademark amortization is not meant to be considered in isolation or as a substitute for items appearing on our financial statements prepared in accordance with U.S. GAAP.  Rather, these non-GAAP measures should be used as a supplement to U.S. GAAP results to assist the reader in better understanding operational performance of the Company.  The Company cautions that these measures are not defined terms under U.S. GAAP and their definitions should be carefully reviewed and understood by investors.  Investors should be aware that Luxottica Group’s method of calculating EPS before trademark amortization may differ from methods used by other companies. The Company recognizes that the usefulness of EPS before trademark amortization as an evaluative tool may have certain limitations, including:

 

- EPS before trademark amortization does not include the effects of amortization of the Company’s trademarks and other intangible assets.  Because trademarks and other intangible assets are important to our business and to our ability to generate sales, we consider trademark amortization expense as an element of our costs.  Therefore, any measure that excludes trademark amortization expense may have material limitations.

 

- We compensate for these limitations by using EPS before trademark amortization as one of several comparative tools, together with U.S. GAAP measurements, to assist in the evaluation of our operating performance.

 

- See the table on the following page for a reconciliation of EPS before trademark amortization to EPS for the quarters ending March 31, 2007 and March 31, 2008, respectively which are the most directly comparable U.S.GAAP financial measure for 1Q07 and 1Q08.

 

 

4



 

 

Non-U.S. GAAP Measures: EPS before Trademark Amortization

(Millions of Euro, unless otherwise noted)

 

 

 

1Q07

 

1Q08

Trademark amortization and
other similar intangible
assets

(+)

 

15

 

21

 

 

 

 

 

Taxes on trademark
amortization and other
similar intangible assets

(–)

 

(6)

 

(8)

 

 

 

 

 

Trademark amortization and
other similar intangible
assets, net of taxes

(=)

 

9

 

13

 

 

 

 

 

Average number of shares
outstanding as of March 31
(in thousands)

(/)

 

453,990

 

456,361

Trademark amortization
and other similar intangible
assets, net of taxes, per
share

(=)

 

0.02

 

0.03

EPS
(+)

 

0.28

 

0.23

EPS before trademark
amortization and other
similar intangible assets,
net of taxes

(=)

 

0.30

 

0.26

 

- TABLES TO FOLLOW -

 

 

5



 

 

LUXOTTICA GROUP

 

CONSOLIDATED FINANCIAL HIGHLIGHTS

FOR THE THREE-MONTH PERIODS ENDED

MARCH 31, 2008 AND MARCH 31, 2007

 

KEY FIGURES IN THOUSANDS OF EURO (3)

 

 

 

 

 

 

 

 

 

 

2008

 

2007

 

% Change

 

 

 

 

 

 

 

 

 

NET SALES

 

1,398,703

 

1,299,825

 

7.6

%

 

 

 

 

 

 

 

 

NET INCOME

 

103,705

 

128,257

 

–19.1

%

 

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE (ADS) (2):

 

0.23

 

0.28

 

–19.6

%

 

 

 

 

 

 

 

 

EPS BEFORE TRADEMARK AMORTIZATION (4):

 

0.26

 

0.30

 

–15.3

%

 

 

 

 

 

 

 

 

 

 

KEY FIGURES IN THOUSANDS OF U.S. DOLLARS (1) (3)

 

 

 

 

 

 

 

 

 

 

2008

 

2007

 

% Change

 

 

 

 

 

 

 

 

 

NET SALES

 

2,094,698

 

1,703,551

 

23.0

%

 

 

 

 

 

 

 

 

NET INCOME

 

155,309

 

168,094

 

–7.6

%

 

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE (ADS) (2):

 

0.34

 

0.37

 

–8.1

%

 

 

 

 

 

 

 

 

EPS BEFORE TRADEMARK AMORTIZATION (4):

 

0.38

 

0.40

 

–3.2

%

 

 

 

 

 

 

 

 

 


Notes :

 

2008

 

2007

 

 

 

 

(1) Average exchange rate (in U.S. Dollars per Euro)

 

1.4976

 

1.3106

 

 

 

 

(2) Weighted average number of outstanding shares

 

456,360,623

 

453,990,312

 

 

 

 

(3) Except earnings per share (ADS), which are expressed in Euro and U.S. Dollars, respectively

(4) EPS before trademark amortization is a non U.S. GAAP measure. For additional disclosure regarding EPS before trademark amortization please refer to Appendix

 

 

6



 

 

LUXOTTICA GROUP

 

CONSOLIDATED INCOME STATEMENT

FOR THE THREE-MONTH PERIODS ENDED

MARCH 31, 2008 AND MARCH 31, 2007

 

In thousands of Euro (1)

 

1Q08

 

% of sales

 

1Q07

 

% of sales

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

1,398,703

 

100.0

%

1,299,825

 

100.0

%

7.6

%

COST OF SALES

 

(470,910

)

 

 

(416,894

)

 

 

 

 

GROSS PROFIT

 

927,794

 

66.3

%

882,931

 

67.9

%

5.1

%

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

SELLING EXPENSES

 

(437,582

)

 

 

(404,906

)

 

 

 

 

ROYALTIES

 

(34,973

)

 

 

(34,491

)

 

 

 

 

ADVERTISING EXPENSES

 

(92,000

)

 

 

(85,463

)

 

 

 

 

GENERAL AND ADMINISTRATIVE EXPENSES

 

(134,980

)

 

 

(118,928

)

 

 

 

 

TRADEMARK AMORTIZATION

 

(21,201

)

 

 

(15,017

)

 

 

 

 

TOTAL

 

(720,736

)

 

 

(658,806

)

 

 

 

 

OPERATING INCOME

 

207,057

 

14.8

%

224,125

 

17.2

%

7.6

%

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSES

 

(34,356

)

 

 

(17,837

)

 

 

 

 

INTEREST INCOME

 

2,941

 

 

 

3,008

 

 

 

 

 

OTHER - NET

 

(5,173

)

 

 

(378

)

 

 

 

 

OTHER INCOME (EXPENSES)-NET

 

(36,589

)

 

 

(15,207

)

 

 

 

 

INCOME BEFORE PROVISION FOR INCOME TAXES

 

170,469

 

12.2

%

208,918

 

16.1

%

18.4

%

PROVISION FOR INCOME TAXES

 

(59,664

)

 

 

(75,211

)

 

 

 

 

INCOME BEFORE MINORITY INTEREST IN INCOME OF CONSOLIDATED SUBSIDIARIES

 

110,805

 

 

 

133,708

 

 

 

 

 

MINORITY INTEREST IN INCOME OF CONSOLIDATED SUBSIDIARIES

 

(7,099

)

 

 

(5,451

)

 

 

 

 

NET INCOME

 

103,705

 

7.4

%

128,257

 

9.9

%

19.1

%

BASIC EARNINGS PER SHARE (ADS):

 

0.23

 

 

 

0.28

 

 

 

 

 

FULLY DILUTED EARNINGS PER SHARE (ADS):

 

0.23

 

 

 

0.28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF OUTSTANDING SHARES

 

456,360,623

 

 

 

453,990,312

 

 

 

 

 

FULLY DILUTED AVERAGE NUMBER OF SHARES

 

459,711,568

 

 

 

457,341,257

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Notes :

(1) Except earnings per share (ADS), which are expressed in Euro

 

 

7



 

LUXOTTICA GROUP

 

CONSOLIDATED BALANCE SHEET

AS OF MARCH 31, 2008 AND DECEMBER 31, 2007

 

In thousands of Euro

 

March 31, 2008

 

December 31, 2007

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

CASH

 

219,410

 

302,894

 

MARKETABLE SECURITIES

 

3,742

 

21,345

 

ACCOUNTS RECEIVABLE

 

776,808

 

665,184

 

SALES AND INCOME TAXES RECEIVABLE

 

63,081

 

89,000

 

INVENTORIES

 

541,525

 

575,016

 

PREPAID EXPENSES AND OTHER

 

157,675

 

139,305

 

DEFERRED TAX ASSETS - CURRENT

 

121,787

 

117,853

 

TOTAL CURRENT ASSETS

 

1,884,029

 

1,910,597

 

 

 

 

 

 

 

PROPERTY, PLANT AND EQUIPMENT - NET

 

1,014,337

 

1,057,782

 

 

 

 

 

 

 

OTHER ASSETS

 

 

 

 

 

INTANGIBLE ASSETS - NET

 

3,660,958

 

3,907,957

 

INVESTMENTS

 

17,689

 

17,668

 

OTHER ASSETS

 

184,989

 

194,329

 

SALES AND INCOME TAXES RECEIVABLE

 

1,042

 

1,042

 

DEFERRED TAX ASSETS - NON-CURRENT

 

80,056

 

67,891

 

TOTAL OTHER ASSETS

 

3,944,734

 

4,188,887

 

 

 

 

 

 

 

TOTAL

 

6,843,101

 

7,157,266

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

BANK OVERDRAFTS

 

483,346

 

455,588

 

CURRENT PORTION OF LONG-TERM DEBT

 

730,652

 

792,617

 

ACCOUNTS PAYABLE

 

336,249

 

423,432

 

ACCRUED EXPENSES AND OTHER

 

399,106

 

441,721

 

ACCRUAL FOR CUSTOMERS’ RIGHT OF RETURN

 

27,636

 

26,557

 

INCOME TAXES PAYABLE

 

61,232

 

19,314

 

TOTAL CURRENT LIABILITIES

 

2,038,220

 

2,159,229

 

 

 

 

 

 

 

LONG-TERM LIABILITIES:

 

 

 

 

 

LONG-TERM DEBT

 

1,734,229

 

1,926,523

 

LIABILITY FOR TERMINATION INDEMNITIES

 

56,874

 

56,911

 

DEFERRED TAX LIABILITIES - NON-CURRENT

 

227,587

 

248,377

 

OTHER

 

255,870

 

229,972

 

TOTAL LONG-TERM LIABILITIES

 

2,274,561

 

2,461,782

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES:

 

 

 

 

 

MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES

 

42,635

 

41,097

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY:

 

 

 

 

 

462,872,820 ORDINARY SHARES AUTHORIZED AND ISSUED - 456,438,034 SHARES OUTSTANDING

 

27,824

 

27,757

 

NET INCOME

 

103,705

 

492,204

 

RETAINED EARNINGS

 

2,356,155

 

1,975,196

 

TOTAL SHAREHOLDERS’ EQUITY

 

2,487,685

 

2,495,158

 

 

 

 

 

 

 

TOTAL

 

6,843,101

 

7,157,266

 

 

 

8



 

LUXOTTICA GROUP

 

CONSOLIDATED FINANCIAL HIGHLIGHTS

FOR THE THREE-MONTH PERIODS ENDED

MARCH 31, 2008 AND MARCH 31, 2007
- SEGMENTAL INFORMATION -

 

In thousands of Euro

 

Manufacturing

 

 

 

Inter-Segment

 

 

 

 

 

and

 

 

 

Transactions and

 

 

 

 

 

Wholesale

 

Retail

 

Corporate Adj.

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

712,264

 

779,142

 

(92,702

)

1,398,703

 

Operating Income

 

172,765

 

67,305

 

(33,013

)

207,057

 

% of sales

 

24.3

%

8.6

%

 

 

14.8

%

Capital Expenditures

 

20,675

 

29,011

 

 

 

49,686

 

Depreciation & Amortization

 

22,480

 

29,728

 

16,055

 

68,263

 

Assets

 

2,819,504

 

1,617,373

 

2,406,224

 

6,843,101

 

 

 

 

 

 

 

 

 

 

 

2007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

548,498

 

833,562

 

(82,235

)

1,299,825

 

Operating Income

 

151,010

 

101,383

 

(28,268

)

224,125

 

% of sales

 

27.5

%

12.2

%

 

 

17.2

%

Capital Expenditures

 

19,193

 

34,292

 

 

 

53,485

 

Depreciation & Amortization

 

15,319

 

29,479

 

9,954

 

54,751

 

Assets

 

2,132,553

 

1,411,723

 

1,772,349

 

5,316,625

 

 

 

 

 

 

 

 

 

 

 

2007 Pro-forma (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

675,418

 

868,410

 

(98,925

)

1,444,904

 

Operating income

 

157,399

 

102,421

 

(34,944

)

224,875

 

% of sales

 

23.3

%

11.8

%

 

 

15.6

%

Depreciation & Amortization

 

21,792

 

31,599

 

16,630

 

70,021

 

 


Notes :

 

(1) These consolidated pro-forma amounts reflect the consolidation of Oakley Inc. results, a subsidiary that was acquired in November 14, 2007, for the first three months of 2007 (as it is in 2008) and assuming the same trademark amortization as in 2008, to give comparative information for the two periods discussed. This information does not purport to be indicative of the actual results that would have been achieved had the Oakley acquisition been completed as of January 1, 2007.

 

9



 

LUXOTTICA GROUP

 

RECONCILIATION OF THE CONSOLIDATED INCOME STATEMENT

PREPARED IN ACCORDANCE WITH US GAAP AND IAS / IFRS FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2008,

PURSUANT TO CONSOB REGULATION N. 27021 OF APRIL 7, 2000 AND IN ACCORDANCE WITH CONSOB

COMMUNICATION DME/5015175 DATED MARCH 10, 2005

 

CONSOLIDATED INCOME STATEMENT

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In thousands of Euro (1)

 

US GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

IAS / IFRS

 

 

 

2008

 

IFRS 3

 

IAS 12

 

IAS 19

 

IAS 38

 

IAS 39

 

Total

 

2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business combination

 

Income Taxes

 

Employee benefit

 

Intangible Depreciation

 

Derivatives

 

adj. IAS-IFRS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

1,398,703

 

 

 

 

 

 

 

 

 

 

 

 

 

1,398,703

 

COST OF SALES

 

(470,910

)

(1,050

)

 

 

 

 

 

 

 

 

(1,050

)

(471,960

)

GROSS PROFIT

 

927,794

 

(1,050

)

 

 

 

 

 

 

 

 

(1,050

)

926,743

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SELLING EXPENSES

 

(437,582

)

(1,298

)

 

 

 

 

 

 

 

 

(1,298

)

(438,880

)

ROYALTIES

 

(34,973

)

 

 

 

 

 

 

 

 

 

 

 

 

(34,973

)

ADVERTISING EXPENSES

 

(92,000

)

 

 

 

 

 

 

113

 

 

 

113

 

(91,887

)

GENERAL AND ADMINISTRATIVE EXPENSES

 

(134,980

)

(884

)

 

 

120

 

 

 

 

 

(764

)

(135,744

)

TRADEMARK AMORTIZATION

 

(21,201

)

 

 

 

 

 

 

 

 

 

 

 

 

(21,201

)

TOTAL

 

(720,736

)

(2,182

)

 

 

120

 

113

 

 

 

(1,949

)

(722,685

)

OPERATING INCOME

 

207,057

 

(3,232

)

 

 

120

 

113

 

 

 

(2,999

)

204,058

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSES

 

(34,356

)

(806

)

 

 

 

 

 

 

5,012

 

4,206

 

(30,152

)

INTEREST INCOME

 

2,941

 

 

 

 

 

 

 

 

 

 

 

 

 

2,941

 

OTHER - NET

 

(5,173

)

 

 

 

 

 

 

 

 

70

 

70

 

(5,103

)

OTHER INCOME (EXPENSES)-NET

 

(36,589

)

(806

)

 

 

 

 

 

 

5,082

 

4,276

 

(32,314

)

INCOME BEFORE PROVISION FOR INCOME TAXES

 

170,469

 

(4,038

)

 

 

120

 

113

 

5,082

 

1,277

 

171,746

 

PROVISION FOR INCOME TAXES

 

(59,664

)

1,263

 

6,337

 

(46

)

(46

)

(1,202

)

6,306

 

(53,358

)

INCOME BEFORE MINORITY INTEREST IN INCOME OF CONSOLIDATED SUBSIDIARIES

 

110,805

 

(2,775

)

6,337

 

74

 

67

 

3,880

 

7,583

 

118,388

 

MINORITY INTEREST IN INCOME OF CONSOLIDATED SUBSIDIARIES

 

(7,099

)

3,678

 

 

 

 

 

 

 

 

 

3,678

 

(3,421

)

NET INCOME

 

103,705

 

904

 

6,337

 

74

 

67

 

3,880

 

11,261

 

114,967

 

BASIC EARNINGS PER SHARE (ADS) (1)

 

0.23

 

 

 

 

 

 

 

 

 

 

 

 

 

0.25

 

FULLY DILUTED EARNINGS PER SHARE (ADS) (1)

 

0.23

 

 

 

 

 

 

 

 

 

 

 

 

 

0.25

 

WEIGHTED AVERAGE NUMBER OF OUTSTANDING SHARES

 

456,360,623

 

 

 

 

 

 

 

 

 

 

 

 

 

456,360,623

 

FULLY DILUTED AVERAGE NUMBER OF SHARES

 

459,711,568

 

 

 

 

 

 

 

 

 

 

 

 

 

459,711,568

 

 


Notes :

(1) Except earnings per share (ADS), which are expressed in Euro

 

10



 

NON-GAAP MEASURE:

 

EBITDA, PRO FORMA EBITDA AND NET DEBT TO PRO FORMA EBITDA RATIO

 

Net debt means the sum of bank overdrafts, current portion of long-term debt and long-term debt, less cash and cash equivalents. EBITDA represents income from operations before depreciation and amortization. Pro forma EBITDA reflects the consolidated EBITDA of the Company as adjusted to include the results of operations of Oakley, Inc., which was acquired by the Company on November 14, 2007, as if it had been acquired on January 1, 2007. The Company believes that pro forma EBITDA is useful to both management and investors in evaluating the Company’s operating performance compared to that of other companies in its industry. Our calculation of pro forma EBITDA allows us to compare our operating results with those of other companies without giving effect to financing, income taxes and the accounting effects of capital spending, which items may vary for different companies for reasons unrelated to the overall operating performance of a company’s business. The net debt to pro forma EBITDA ratio allows management to assess the cost of existing debt since it affects the interest rates charged by the Company’s lenders.

 

Management also believes that the net debt to pro forma EBITDA is useful to investors because it allows investors to assess the impact of cash flows on the Company’s level of leverage. EBITDA, Pro forma EBITDA and the ratio of net debt to pro forma EBITDA are not measures of performance under accounting principles generally accepted in the United States (U.S. GAAP). We include them in this press release in order to:

-       improve transparency for investors;

-       assist investors in their assessment of the Company’s operating performance and its ability to refinance its debt as it

-       assist investors in their assessment of the Company’s cost of debt;

-       ensure that these measures are fully understood in light of how the Company evaluates its operating results and

-       properly define the metrics used and confirm their calculation; and

-       share these measures with all investors at the same time.

 

EBITDA, Pro forma EBITDA and the ratio of net debt to pro forma EBITDA are not meant to be considered in isolation or as a substitute for items appearing on our financial statements prepared in accordance with U.S. GAAP. Rather, these non-GAAP measures should be used as a supplement to U.S. GAAP results to assist the reader in better understanding the operational performance of the Company. The Company cautions that these measures are not defined terms under U.S. GAAP and their definitions should be carefully reviewed and understood by investors. Investors should be aware that Luxottica Group’s method of calculating EBITDA and pro forma EBITDA and the ratio of net debt to pro forma EBITDA may differ from methods used by other companies. The Company recognizes that the usefulness of EBITDA, pro forma EBITDA and the ratio of net debt to pro forma EBITDA as evaluative tools may have certain limitations, including the following:

 

-  EBITDA and Pro forma EBITDA do not include interest expense. Because we have borrowed money in order to finance our operations, interest expense is a necessary element of our costs and ability to generate profits and cash flows. Therefore, any measure that excludes interest expense may have material limitations.

 

-  EBITDA and Pro forma EBITDA do not include depreciation and amortization expense. Because we use capital assets, depreciation and amortization expense is a necessary element of our costs and ability to generate profits. Therefore, any measure that excludes depreciation and expense may have material limitations.

 

-  EBITDA and Pro forma EBITDA do not include provision for income taxes. Because the payment of income taxes is a necessary element of our costs, any measure that excludes tax expense may have material limitations.

 

-  EBITDA and Pro forma EBITDA do not reflect cash expenditures or future requirements for capital expenditures or contractual commitments.

 

-  EBITDA and Pro forma EBITDA do not reflect changes in, or cash requirements for, working capital needs.

 

-  EBITDA and Pro forma EBITDA do not allow us to analyze the effect of certain recurring and non-recurring items that materially affect our net income or loss.

 

-       The ratio of net debt to pro forma EBITDA is net of cash and cash equivalents, restricted cash and short-term investments, thereby reducing our debt position. Because we may not be able to use our cash to reduce our debt on a dollar-for-dollar basis, this measure may have material limitations.

 

We compensate for the foregoing limitations by using EBITDA, pro forma EBITDA and the ratio of net debt to pro forma EBITDA as two of several comparative tools, together with U.S. GAAP measurements, to assist in the evaluation of our future operating performance and leverage.

 

See the tables on the following page for (1) a reconciliation of net debt as of March 31, 2008 and December 31, 2007 to longterm debt as of March 31, 2008 and December 31, 2007, which is the most directly comparable U.S. GAAP financial measure, (2) a reconciliation of EBITDA to income from operations for March 31, 2008 and pro forma EBITDA to income from operations for March 31, 2007 and December 31, 2007, which is the most directly comparable U.S. GAAP financial measure, and (3) the calculation of the ratio of net debt to pro forma EBITDA.

 

11



 

NON-U.S.GAAP MEASURE: NET DEBT

 

 

 

Dec. 31, 2007

 

March. 31, 2008

 

Millions of euro

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

1,926.5

 

1,734.2

 

(+)

 

 

 

 

 

Current portion of long-term debt

 

792.6

 

730.7

 

(+)

 

 

 

 

 

Bank overdrafts

 

455.6

 

483.3

 

(+)

 

 

 

 

 

Cash

 

(302.9

)

(219.4

)

(-)

 

 

 

 

 

Net debt

 

2,871.8

 

2,728.8

 

(=)

 

 

 

 

 

 

12



 

Non-U.S. GAAP Measure:

EBITDA, proforma EBITDA and ratio of net debt to proforma EBITDA

 

 

 

1Q07

 

FY07

 

1Q08

 

EBITDA LTM as of March 31, 2008

 

Millions of Euro

 

Proforma (1)

 

Proforma (1)

 

 

 

Proforma (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

(-)

 

(+)

 

(+)

 

(=)

 

 

 

 

 

 

 

 

 

 

 

Income from operations (1)

 

 

 

 

 

 

 

 

 

(+)

 

(224.9)

 

878.1

 

207.1

 

860.3

 

Depreciation & amortization

 

 

 

 

 

 

 

 

 

(+)

 

(70.0)

 

288.2

 

68.3

 

286.4

 

EBITDA

 

 

 

 

 

 

 

 

 

(=)

 

(294.9)

 

1,166.3

 

275.3

 

1,146.7

 

Net debt / EBITDA

 

 

 

2.46x

 

 

 

2.38x

 

 


(1) These consolidated pro-forma amounts reflect the consolidation of Oakley Inc. results, a subsidiary that was acquired in November 2007, for the first three months of 2007 (as it is in 2008) and assume the same trademark amortization as in 2008, to give comparative information for the two periods discussed. This information does not purport to be indicative of the actual results that would have been achieved had the Oakley acquisition been completed as of January 1, 2007.

 

13



 

EXHIBIT INDEX

 

Exhibit
Number

 

Exhibit

15.1

 

Letter from Luxottica Group S.p.A. to ADS Holders.

15.2

 

Revised Annex D to the Notice of Ordinary and Extraordinary Meeting of Shareholders and Proxy Statement for Luxottica Group S.p.A.’s Ordinary and Extraordinary Meeting of Shareholders to be held on May 13, 2008.

 

 

14



 

 

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

 

 

 

LUXOTTICA GROUP S.p.A.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By: /s/ ENRICO CAVATORTA

Date:  April 29, 2008

 

ENRICO CAVATORTA
CHIEF FINANCIAL OFFICER

 

 

15