LUXOTTICA GROUP SPA 
By MILAN, July 25, 2011 /PRNewswire/ -- The Board of Directors of Luxottica Group S.p.A. (MTA: LUX; NYSE: LUX), a leader in the design, manufacture and distribution of fashion, luxury and sports eyewear, met today and approved the consolidated results for the second quarter and six months ended June 30, 2011 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IAS/IFRS).
Second quarter of 2011(1)
-------------------------
(In millions of Euro) 2Q 2011 2Q 2010 Change
------- ------- ------
(at current
exchange
rates)
+9.5% at
Net sales 1,633.5 1,595.1 constant +2.4%
exchange
rates(2)
Operating income 276.8 258.3 +7.2%
Net income attributable
to Luxottica Group
stockholders 162.1 150.1 +8.0%
Earnings per share 0.35 0.33 +7.6%
Earnings per share in
U.S. $0.51 0.42 +21,9%
--------------------- ----- ---- -----
First half of 2011(1)
---------------------
(In millions of Euro) 1H 2011 1H 2010 Change
------- ------- ------
(at current
exchange
rates)
+9.3% at
Net sales 3,189.6 2,986.8 constant +6.8%
exchange
rates(2)
Operating income 484.2 429.6 +12.7%
Net income attributable
to Luxottica Group
stockholders 276.8 245.1 +12.9%
Earnings per share 0.60 0.53 +12.5%
Earnings per share in
U.S. $0.84 0.71 +19.0%
--------------------- ----- ---- -----
Operating performance for the second quarter of 2011
During the second quarter of 2011, both the growth trend and Luxottica's investments in its future continued. In a macroeconomic environment that was, as a whole, positive, the Group has successfully achieved results that show great improvement in all the major geographic areas where it operates, with particularly solid performance recorded in Europe, North America and the emerging markets. Despite the significant depreciation of the U.S. dollar against the Euro, going from 1.2708 during the second quarter of 2010 to 1.4391 (-12%) during the second quarter of 2011, net sales for the second quarter of 2011 exceeded Euro 1.6 billion and net income stood at Euro 162 million, the best results ever recorded in the history of Luxottica.
"The results of the second quarter of 2011 are truly strong," commented Andrea Guerra, Chief Executive Officer of Luxottica. "We worked with great determination and passion in both divisions and in all the countries where we operate, on the one hand achieving excellent performance and on the other laying the basis for an even more solid growth. During the period, in fact, we were able to grow significantly in key markets such as India, China, Brazil, Mexico and Turkey, countries where we are building a strong Luxottica presence. Performance was also excellent in Europe, the Middle East, South East Asia and Latin America, where we have continued to invest in our future, opening new stores, strengthening our presence in the most promising markets and increasing our commitment to relating even more closely to the consumer through constant dialogue.
"As always, our brands are at the heart: the premium and luxury brands have confirmed the positive trends seen during the first quarter of the year, posting double-digit growth, and brands such as Chanel, Prada, Burberry, Tiffany and Ralph Lauren performed extremely well. Ray-Ban, Oakley, LensCrafters and Sunglass Hut continued to record very positive performance and, thanks to the great commitment of the entire Group, comparable store sales of OPSM in Australia were back to positive, despite the fact that the Australian environment continues to be challenging.
"Despite the weakening of the U.S. dollar exchange rate, our net sales in U.S. dollars in the fundamental region of North America were strong, growing by 7.5% during the quarter.
"We strongly believe that these results provide an excellent basis for us to look with confidence to the second half of the year."
In the second quarter of the year, Luxottica achieved positive performances in most geographic regions where it is present. The results recorded by the Wholesale Division are worthy of note, improving on the best-ever sales of previous quarters, recording strong growth in net sales (+11.6% at constant exchange rates(2)). Emerging markets made a key contribution to this performance, along with Europe, particularly France, Germany, Spain and Italy, which enjoyed an especially positive 'sun' season.
The results for Sunglass Hut were also exceptional, for the fourth consecutive quarter, benefitting from the continuous actions aimed at attracting and creating meaningful relationships with new consumers, as well as the opening of the first stores in Brazil and China. LensCrafters once again proved to be the point of reference for the optical sector in North America, thanks in part to the major investments made in new technologies and laboratories.
Consolidated results
In the second quarter of 2011, net sales for the Group rose by 9.5% at constant exchange rates(2) (+2.4% at current exchange rates), to Euro 1,633.5 million from Euro 1,595.1 million in the second quarter of 2010. During the half-year period, net sales rose by 9.3% at constant exchange rates(2) to Euro 3,189.6 million (Euro 2,986.8 million in the first half of 2010).
EBITDA(3) for the second quarter of 2011 grew over the previous year by 5.0% to Euro 352.2 million, from Euro 335.4 million in the second quarter of 2010. For the first half of the year, EBITDA(3) increased to Euro 635.1 million from Euro 578.0 million posted for the first half of 2010.
Operating income for the second quarter of 2011 settled at Euro 276.8 million (Euro 258.3 million for the same period last year, +7.2%), while the Group's operating margin grew from 16.2% in the second quarter of 2010 to 16.9% in the second quarter of 2011. For the first half of the year, the operating income amounted to Euro 484.2 million, up 12.7% over the Euro 429.6 million posted for the same period last year.
Net income for the second quarter of 2011 increased to Euro 162.1 million, up by 8.0% from Euro 150.1 million for the same period of 2010, resulting in earnings per share (EPS) of Euro 0.35 (at an average Euro/U.S. dollar exchange rate of 1.4391). The EPS in U.S. dollars grew by 21.9% from U.S. $0.42 in the second quarter of 2010 to U.S. $0.51 in the second quarter of 2011.
For the second quarter of 2011, the Group increased the investments in its future, opening new stores and investing in new technologies. By carefully controlling working capital, Luxottica once again generated excellent positive free cash flow(3) (Euro 154 million). Thanks to this excellent performance and after having paid dividends during the quarter of approximately Euro 200 million, net debt as of June 30, 2011 came to Euro 2,118 million (Euro 2,111 million at the end of 2010), with a ratio of net debt to EBITDA(3) of 1.9x as of June 30, 2011 as compared with 2.0x at the end of 2010.
Overview of performance at the Wholesale Division
For the second quarter of 2011, the Wholesale Division recorded its best ever results, both in terms of net sales and of profitability. The Division confirmed its ability to grow significantly in all the geographic areas where the Group is present, exploiting opportunities across the board. Underlying this performance is the excellent feedback on our new collections, the ability of the organization to build and maintain strong relationships with customers, the success in promoting Luxottica's brands by highlighting their core values and providing excellent customer service.
During the quarter, Ray-Ban and Oakley results confirmed once again that they are truly exceptional brands. Additionally, the growth trends of the premium and luxury brands and of the STARS program were also confirmed.
The Division's net sales rose to Euro 704.0 million in the second quarter of 2011 from Euro 651.2 million in the second quarter of 2010 (+11.6% at constant exchange rates(2) and +8.1% at current exchange rates). For the first half of 2011, net sales settled at Euro 1,345.1 million, up 12.5% at constant exchange rates(2) over the Euro 1,204.7 million recorded for the first half of 2010 (+11.7% at current exchange rates).
Operating income for the Wholesale Division therefore amounted to Euro 188.5 million for the second quarter of 2011, up 19.9% over the 157.2 million recorded for the second quarter of 2010. The operating margin went from 24.1% in the second quarter of 2010 to 26.8% for the second quarter of 2011. In the first six months of 2011, the operating margin came to 25.0% (23.0% in the first half of 2010).
Overview of performance at the Retail Division
During the second quarter of 2011, the Division continued to grow, with LensCrafters and Sunglass Hut in particular achieving excellent results: at constant exchange rates(2), net sales for the Division grew by 8.0%. The depreciation of the U.S. dollar against the Euro did, however, affect the translation of net sales, since approximately 80% derive from sales in North America. Net sales at current exchange rates therefore came to Euro 929.6 million for the second quarter of 2011 (Euro 944.0 million in the second quarter 2010, -1.5% at current exchange rates). During the first six months of 2011, net sales settled at Euro 1,844.5 million, up 7.2% at constant exchange rates(2)( )on the Euro 1,782.1 million recorded for the first half of 2010 (+3.5% at current exchange rates).
In terms of comparable store sales(4), the "prescription" business in North America made good progress (+3.1%), with LensCrafters recording a 5.7% increase in comparable store sales(4), continuing to benefit from the action and investments made during recent months, and Pearle Vision is back to positive.
Thanks to the efforts made by the whole organization, comparable store sales(4) of OPSM in Australia rose by 1.2% in the second quarter of 2011, after 6 quarters of negative performance, over the same period last year, despite the Australian environment continuing to be challenging.
Once again, Sunglass Hut, the Group's sun specialty chain that operates in a number of geographical areas, posted exceptional results, with overall comparable store sales(4) up 7.8% in the second quarter of 2011 and a particularly positive performance in the United States (+9.7%).
Due to the exchange rate effect, operating income of the Division went from Euro 136.6 million in the second quarter of 2010 to 129.8 million in the second quarter of 2011 (-5.0%). The operating margin for such periods therefore went from 14.5% to 14.0%, respectively. On a half-yearly basis, the operating margin was 12.3% (12.6% in the first half of 2010).
Results for the first quarter and first half of 2011 will be discussed today in a conference call with the financial community starting at 6:30 PM CET. The audio portion and related presentation will be available to all via live webcast at www.luxottica.com.
The officer responsible for preparing the Company's financial reports, Enrico Cavatorta, declares, pursuant to Article 154-bis, Section 4, of the Consolidated Law on Finance, that the accounting information contained in this press release is consistent with the data in the supporting documents, books of accounts and other accounting records.
Contacts
--------
Ivan Dompe Alessandra Senici
Group Corporate Communications
Director Group Investor Relations Director
Tel.: +39 (02) 8633 4726 Tel.: +39 (02) 8633 4038
E-mail:
E-mail: ivan.dompe@luxottica.com InvestorRelations@Luxottica.com
www.luxottica.com
Notes on the press release
1 All comparisons, including percentage changes, refer
to the three- and six-month periods ended June 30,
2011 and June 30, 2010, respectively.
2 2011 figures at constant exchange rates have been
calculated using the average exchange rates in effect
for the corresponding period in the previous year. For
further information, please refer to the attached tables.
3 EBITDA, EBITDA margin, free cash flow, net debt and
the ratio of net debt to EBITDA are not measures in
accordance with IAS/IFRS. For additional information
on non-IAS/IFRS measures, please see the attached
tables.
4 Comparable store sales reflect 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.
Luxottica Group S.p.A.
Luxottica Group is a leader in premium, luxury and sports eyewear with approximately 7,000 optical and sun retail stores in North America, Asia-Pacific, China, South Africa, Latin America and Europe, and a strong, well-balanced brand portfolio. House brands include Ray-Ban, the world's most famous sun eyewear brand, Oakley, Vogue, Persol, Oliver Peoples, Arnette and REVO, while licensed brands include Bvlgari, Burberry, Chanel, Dolce & Gabbana, Donna Karan, Polo Ralph Lauren, Prada, Tiffany and Versace. In addition to a global wholesale network involving 130 different countries, the Group manages leading retail chains in major markets, including LensCrafters, Pearle Vision and ILORI in North America, OPSM and Laubman & Pank in Asia-Pacific, LensCrafters in China, GMO in Latin America and Sunglass Hut worldwide. The Group's products are designed and manufactured at its six manufacturing plants in Italy, two wholly-owned plants in the People's Republic of China and one plant in the United States devoted to the production of sports eyewear. In 2010, Luxottica Group posted net sales of almost euro 5.8 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 manage the effects of the current uncertain international economic outlook, the ability to successfully acquire and integrate new businesses, the ability to predict future economic conditions and changes to consumer preferences, the ability to successfully introduce and market new products, the ability to maintain an efficient distribution system, the ability to achieve and manage growth, the ability to negotiate and maintain favourable license agreements, the availability of correction alternatives to prescription eyeglasses, fluctuations in exchange rates, changes in local conditions, the ability to protect intellectual property, the ability to maintain relations with those hosting our stores, computer system problems, inventory-related risks, credit and insurance risks, changes to tax regimes as well as other political, economic and technological factors and other risks and uncertainties referred to in Luxottica Group's filings with the U.S. Securities and Exchange Commission. These forward looking statements are made as of the date hereof and Luxottica Group does not assume any obligation to update them.
- APPENDIX FOLLOWS -
LUXOTTICA GROUP
CONSOLIDATED FINANCIAL HIGHLIGHTS
FOR THE THREE-MONTH PERIODS ENDED
JUNE 30, 2011 AND JUNE 30, 2010
In accordance with IAS/IFRS
KEY FIGURES IN THOUSANDS OF EURO (1)
------------------------------------
2011 2010 % Change
NET SALES 1,633,544 1,595,124 2.4%
NET INCOME ATTRIBUTABLE TO LUXOTTICA
GROUP STOCKHOLDERS 162,087 150,052 8.0%
BASIC EARNINGS PER SHARE (ADS)(2): 0.35 0.33 7.6%
KEY FIGURES IN THOUSANDS OF U.S. DOLLARS (1) (3)
------------------------------------------------
2011 2010 % Change
NET SALES 2,350,833 2,027,084 16.0%
NET INCOME ATTRIBUTABLE TO LUXOTTICA
GROUP STOCKHOLDERS 233,259 190,686 22.3%
BASIC EARNINGS PER SHARE (ADS) (2): 0.51 0.42 21.7%
Notes : 2011 2010
(1) Except earnings per share (ADS), which are
expressed in Euro and U.S. Dollars, respectively
(2) Weighted average number of
outstanding shares 460,302,612 458,696,583
(3) Average exchange rate (in U.S.
Dollars per Euro) 1.4391 1.2708
LUXOTTICA GROUP
CONSOLIDATED FINANCIAL HIGHLIGHTS
FOR THE SIX-MONTH PERIODS ENDED
JUNE 30, 2011 AND JUNE 30, 2010
In accordance with IAS/IFRS
KEY FIGURES IN THOUSANDS OF EURO (1)
------------------------------------
2011 2010 % Change
NET SALES 3,189,646 2,986,811 6.8%
NET INCOME ATTRIBUTABLE TO LUXOTTICA
GROUP STOCKHOLDERS 276,781 245,143 12.9%
BASIC EARNINGS PER SHARE (ADS) (2) 0.60 0.53 12.5%
KEY FIGURES IN THOUSANDS OF U.S. DOLLARS (1) (3)
------------------------------------------------
2011 2010 % Change
NET SALES 4,475,711 3,962,901 12.9%
NET INCOME ATTRIBUTABLE TO LUXOTTICA
GROUP STOCKHOLDERS 388,379 325,256 19.4%
BASIC EARNINGS PER SHARE (ADS)(2) 0.84 0.71 19.0%
Notes : 2011 2010
(1) Except earnings per share (ADS), which are
expressed in Euro and U.S. Dollars, respectively
(2) Weighted average number of
outstanding shares 460,118,653 458,551,310
(3) Average exchange rate (in U.S.
Dollars per Euro) 1.4032 1.3268
LUXOTTICA GROUP
CONSOLIDATED INCOME STATEMENT
FOR THE THREE-MONTH PERIODS ENDED
JUNE 30, 2011 AND JUNE 30, 2010
In accordance with IAS/IFRS
KEY FIGURES IN THOUSANDS OF
EURO (1)
2Q 2011 % of sales 2Q 2010
NET SALES 1,633,544 100.0% 1,595,124
COST OF SALES (542,674) (529,756)
GROSS PROFIT 1,090,871 66.8% 1,065,367
OPERATING EXPENSES:
SELLING EXPENSES (488,101) (484,763)
ROYALTIES (28,509) (27,632)
ADVERTISING EXPENSES (113,260) (115,345)
GENERAL AND ADMINISTRATIVE
EXPENSES (164,482) (157,875)
TRADEMARK AMORTIZATION AND
OTHER (19,701) (21,422)
TOTAL (814,053) (807,037)
OPERATING INCOME 276,819 16.9% 258,330
OTHER INCOME (EXPENSE):
INTEREST EXPENSES (31,172) (26,932)
INTEREST INCOME 5,148 1,245
OTHER - NET (1,152) (3,934)
OTHER INCOME (EXPENSES)-NET (27,175) (29,622)
INCOME BEFORE PROVISION FOR 249,642 15.3% 228,708
INCOME TAXES
PROVISION FOR INCOME TAXES (85,822) (77,813)
NET INCOME 163,820 10.0% 150,895
OF WHICH ATTRIBUTABLE TO:
-LUXOTTICA GROUP STOCKHOLDERS 162,087 9.9% 150,052
- NON-CONTROLLING INTERESTS 1,734 0.1% 843
NET INCOME 163,820 10.0% 150,895
BASIC EARNINGS PER SHARE
(ADS): 0.35 0.33
FULLY DILUTED EARNINGS PER
SHARE (ADS): 0.35 0.33
WEIGHTED AVERAGE NUMBER OF 460,302,612 458,696,583
OUTSTANDING SHARES
FULLY DILUTED AVERAGE NUMBER
OF SHARES 462,326,882 460,715,012
KEY FIGURES IN THOUSANDS OF
EURO (1)
% of sales % Change
NET SALES 100.0% 2.4%
COST OF SALES
GROSS PROFIT 66.8% 2.4%
OPERATING EXPENSES:
SELLING EXPENSES
ROYALTIES
ADVERTISING EXPENSES
GENERAL AND ADMINISTRATIVE
EXPENSES
TRADEMARK AMORTIZATION AND
OTHER
TOTAL
OPERATING INCOME 16.2% 7.2%
OTHER INCOME (EXPENSE):
INTEREST EXPENSES
INTEREST INCOME
OTHER - NET
OTHER INCOME (EXPENSES)-NET
INCOME BEFORE PROVISION FOR 14.3% 9.2%
INCOME TAXES
PROVISION FOR INCOME TAXES
NET INCOME 9.5% 8.6%
OF WHICH ATTRIBUTABLE TO:
-LUXOTTICA GROUP STOCKHOLDERS 9.4% 8.0%
- NON-CONTROLLING INTERESTS 0.1%
NET INCOME 9.5% 8.6%
BASIC EARNINGS PER SHARE
(ADS):
FULLY DILUTED EARNINGS PER
SHARE (ADS):
WEIGHTED AVERAGE NUMBER OF
OUTSTANDING SHARES
FULLY DILUTED AVERAGE NUMBER
OF SHARES
Notes :
(1) Except earnings per share (ADS), which are expressed in Euro
LUXOTTICA GROUP
CONSOLIDATED INCOME STATEMENT
FOR THE SIX-MONTH PERIODS ENDED
JUNE 30, 2011 AND JUNE 30, 2010
In accordance with IAS/IFRS
KEY FIGURES IN THOUSANDS OF EURO
(1)
In thousands of Euro (1) 2011 % of sales 2010
NET SALES 3,189,646 100.0% 2,986,811
COST OF SALES (1,097,127) (1,029,545)
GROSS PROFIT 2,092,519 65.6% 1,957,265
OPERATING EXPENSES:
SELLING EXPENSES (980,366) (937,529)
ROYALTIES (57,052) (52,500)
ADVERTISING EXPENSES (203,673) (196,488)
GENERAL AND ADMINISTRATIVE
EXPENSES (327,125) (299,640)
TRADEMARK AMORTIZATION AND OTHER (40,069) (41,533)
TOTAL (1,608,285) (1,527,690)
OPERATING INCOME 484,234 15.2% 429,577
OTHER INCOME (EXPENSE):
INTEREST EXPENSES (60,434) (51,571)
INTEREST INCOME 7,235 3,282
OTHER - NET (2,896) (4,752)
OTHER INCOME (EXPENSES)-NET (56,095) (53,041)
INCOME BEFORE PROVISION FOR 428,140 13.4% 376,536
INCOME TAXES
PROVISION FOR INCOME TAXES (147,221) (127,973)
NET INCOME 280,919 8.8% 248,562
OF WHICH ATTRIBUTABLE TO:
- LUXOTTICA GROUP STOCKHOLDERS 276,781 8.7% 245,143
- NONCONTROLLING INTERESTS 4,138 0.1% 3,419
NET INCOME 280,919 8.8% 248,562
BASIC EARNINGS PER SHARE (ADS): 0.60 0.53
FULLY DILUTED EARNINGS PER SHARE
(ADS): 0.60 0.53
WEIGHTED AVERAGE NUMBER OF 460,118,653 458,551,310
OUTSTANDING SHARES
FULLY DILUTED AVERAGE NUMBER OF
SHARES 462,153,860 460,301,289
KEY FIGURES IN THOUSANDS OF EURO
(1)
In thousands of Euro (1) % of sales % Change
NET SALES 100.0% 6.8%
COST OF SALES
GROSS PROFIT 65.5% 6.9%
OPERATING EXPENSES:
SELLING EXPENSES
ROYALTIES
ADVERTISING EXPENSES
GENERAL AND ADMINISTRATIVE
EXPENSES
TRADEMARK AMORTIZATION AND OTHER
TOTAL
OPERATING INCOME 14.4% 12.7%
OTHER INCOME (EXPENSE):
INTEREST EXPENSES
INTEREST INCOME
OTHER - NET
OTHER INCOME (EXPENSES)-NET
INCOME BEFORE PROVISION FOR 12.6% 13.7%
INCOME TAXES
PROVISION FOR INCOME TAXES
NET INCOME 8.3% 13.0%
OF WHICH ATTRIBUTABLE TO:
- LUXOTTICA GROUP STOCKHOLDERS 8.2% 12.9%
- NONCONTROLLING INTERESTS 0.1%
NET INCOME 8.3% 13.0%
BASIC EARNINGS PER SHARE (ADS):
FULLY DILUTED EARNINGS PER SHARE
(ADS):
WEIGHTED AVERAGE NUMBER OF
OUTSTANDING SHARES
FULLY DILUTED AVERAGE NUMBER OF
SHARES
Notes :
(1) Except earnings per share (ADS), which are expressed in Euro
LUXOTTICA GROUP
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2011 AND DECEMBER 31, 2010
In accordance with IAS/IFRS
December 31,
KEY FIGURES IN THOUSANDS OF EURO June 30, 2011 2010
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS 508,397 679,852
ACCOUNTS RECEIVABLE - NET 812,972 655,892
INVENTORIES - NET 586,035 590,036
OTHER ASSETS 204,460 226,759
TOTAL CURRENT ASSETS 2,111,864 2,152,539
NON-CURRENT ASSETS:
PROPERTY, PLANT AND EQUIPMENT - NET 1,192,194 1,229,130
GOODWILL 2,725,907 2,890,397
INTANGIBLE ASSETS - NET 1,058,086 1,155,007
INVESTMENTS 53,568 54,083
OTHER ASSETS 144,042 148,125
DEFERRED TAX ASSETS 369,060 364,299
TOTAL NON-CURRENT ASSETS 5,542,856 5,841,040
TOTAL 7,654,720 7,993,579
CURRENT LIABILITIES:
BANK OVERDRAFTS 187,051 158,648
CURRENT PORTION OF LONG-TERM DEBT 230,381 197,566
ACCOUNTS PAYABLE 481,444 537,742
INCOME TAXES PAYABLE 66,119 60,067
OTHER LIABILITIES 558,020 549,280
TOTAL CURRENT LIABILITIES 1,523,015 1,503,303
NON-CURRENT LIABILITIES:
LONG-TERM DEBT 2,209,278 2,435,071
LIABILITY FOR TERMINATION INDEMNITIES 44,742 45,363
DEFERRED TAX LIABILITIES 416,054 429,848
OTHER LIABILITIES 265,478 310,590
TOTAL NON-CURRENT LIABILITIES 2,935,552 3,220,872
STOCKHOLDERS' EQUITY:
LUXOTTICA GROUP STOCKHOLDERS' EQUITY 3,182,845 3,256,375
NON-CONTROLLING INTEREST 13,308 13,029
TOTAL STOCKHOLDERS' EQUITY 3,196,153 3,269,404
TOTAL 7,654,720 7,993,579
----- --------- ---------
LUXOTTICA GROUP
CONSOLIDATED FINANCIAL HIGHLIGHTS
FOR THE SIX-MONTH PERIODS ENDED
JUNE 30, 2011 AND JUNE 30, 2010
- SEGMENTAL INFORMATION -
In accordance with IAS/IFRS
In
thousands
of Euro Manufacturing Retail Inter-Segment Consolidated
Transactions
and and
Wholesale Corporate Adj.
2011
Net Sales 1,345,101 1,844,545 3,189,646
Operating
Income 336,328 226,562 (78,655) 484,234
% of Sales 25.0% 12.3% 15.2%
Capital
Expenditures 46,169 85,413 131,582
Depreciation
&
Amortization 41,523 69,313 40,069 150,906
2010
Net Sales 1,204,678 1,782,133 2,986,811
Operating
Income 277,325 224,584 (72,333) 429,576
% of Sales 23.0% 12.6% 14.4%
Capital
Expenditures 37,496 45,393 82,889
Depreciation
&
Amortization 38,223 68,666 41,533 148,421
Non-IAS/IFRS Measures: Adjusted measures
In order to provide a supplemental comparison of current period
results of operations to prior periods, we have adjusted for
certain non-recurring
transactions or events.
We have made such adjustments to the following measures: EBITDA,
EBITDA margin and net income.
For comparative purposes, management has adjusted each of the
foregoing measures by excluding the following. :
(a) a non-recurring gain in 2010 from the release of a
provision for taxes of approximately USD 27 million
(approximately Euro 20 million at December 31, 2010) related to
the sale of the Things Remembered retail chain in 2006; and
(b) a non-recurring loss in the fourth quarter of 2010 from the
impairment charge recorded of approximately Euro 20 million
related to certain of the Company assets in the Australian
region.
The Company believes that these adjusted measures are useful to
both management and investors in evaluating the Company's
operating performance
compared with that of other companies in its industry because
they exclude the impact of non-recurring items that are not
relevant
to the Company's operating performance.
The adjusted measures referenced above are not measures of
performance in accordance with International Financial
Reporting Standards
as issued by the International Accounting Standards Board (IAS/
IFRS). We include these adjusted comparisons in this
presentation in order to provide
a supplemental view of operations that excludes items that are
unusual, infrequent or unrelated to our ongoing core
operations.
These adjusted measures are not meant to be considered in
isolation or as a substitute for items appearing on our
financial statements prepared in accordance
with IAS/IFRS. Rather, these non-IAS/IFRS measures should be
used as a supplement to IAS/IFRS results to assist the reader
in better understanding
the operational performance of the Company. The Company
cautions that these adjusted measures are not defined terms
under IAS/IFRS and their definitions
should be carefully reviewed and understood by investors.
Investors should be aware that Luxottica Group's method of
calculating these adjusted measures may
differ from methods used by other companies.
The Company recognizes that there are limitations in the
usefulness of adjusted comparisons due to the subjective nature
of items excluded by
management in calculating adjusted comparisons. We compensate
for the foregoing limitation by using these adjusted measures
as a comparative tool,
together with IAS/IFRS measurements, to assist in the
evaluation of our operating performance.
See the tables on the following pages for a reconciliation of
the adjusted measures discussed above to their most directly
comparable IAS/IFRS
financial measures or, in the case of adjusted EBITDA and
adjusted EBITDA margin, to EBITDA and EBITDA margin,
respectively, which are also
non-IAS/IFRS measures. For a discussion of EBITDA and EBITDA
margin and a reconciliation of EBITDA and EBITDA margin to
their most directly comparable IAS/IFRS financial measures,
see the tables on the earlier pages.
Non-IAS/IFRS Measures: Reconciliation between reported
and adjusted P&L items
Millions of Euro
FY10
----
EBITDA Net Income
------ ----------
Reported 1,013.8 402.2
-------- ------- -----
> Adjustment for goodwill
impairment charge 20.4 20.4
------------------------- ---- ----
> Adjustment for discontinued
operations (19.9)
----------------------------- -----
Adjusted 1,034.2 402.7
-------- ------- -----
Non-IAS/IFRS Measure: EBITDA and EBITDA margin
EBITDA represents net income before non-controlling
interest, taxes, other income/expense, depreciation
and amortization. EBITDA margin means EBITDA divided by
net sales.
The Company believes that EBITDA is useful to both
management and investors in evaluating the Company's
operating performance compared with that of other
companies in its industry.
Our calculation of 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.
EBITDA and EBITDA margin are not measures of performance
under International Financial Reporting Standards as
issued by the International Accounting Standards Board
(IAS/IFRS).
We include them in this presentation 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 matures and incur additional
indebtedness to invest in new business opportunities;
* 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 leverage;
* properly define the metrics used and confirm their
calculation; and
* share these measures with all investors at the same
time.
EBITDA and EBITDA margin are not meant to be considered
in isolation or as a substitute for items appearing on
our financial statements prepared in accordance with
IAS/IFRS.
Rather, these non-IAS/IFRS measures should be used as
a supplement to IAS/IFRS 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 IAS/IFRS and their definitions should be
carefully reviewed and understood by investors.
Investors should be aware that Luxottica Group's method
of calculating EBITDA may differ from methods used by
other companies. The Company recognizes that the
usefulness of EBITDA has certain limitations,
including:
* EBITDA does 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 does 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 does 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 does not reflect cash expenditures or future
requirements for capital expenditures or contractual
commitments;
* EBITDA does not reflect changes in, or cash
requirements for, working capital needs;
* EBITDA does not allow us to analyze the effect of
certain recurring and non-recurring items that
materially affect our net income or loss.
We compensate for the foregoing limitations by using
EBITDA as a comparative tool, together with IAS/IFRS
measurements, to assist in the evaluation of our
operating performance and leverage.
See the table on the following page for a reconciliation
of EBITDA to net income, which is the most directly
comparable IAS/IFRS financial measure, as well as the
calculation of EBITDA margin on net sales.
Non-IAS/IFRS Measure: EBITDA and EBITDA margin
Millions of Euro
2Q 2010 2Q 2011 1H 2010
Net income/(loss) 150.1 162.1 245.1
(+)
---
Net income attributable to
non-controlling interest 0.8 1.7 3.4
(+)
---
Provision for income taxes 77.8 85.8 128.0
(+)
---
Other (income)/expense 29.6 27.2 53.0
(+)
---
Depreciation & amortization 77.0 75.3 148.4
(+)
EBITDA 335.4 352.2 578.0
(=)
Net sales 1,595.1 1,633.5 2,986.8
(/)
EBITDA margin 21.0% 21.6% 19.4%
(=)
Millions of Euro
LTM June 30,
1H 2011 FY10 (1) 2011
Net income/(loss) 276.8 402.7 434.4
(+)
---
Net income attributable to
non-controlling interest 4.1 5.1 5.8
(+)
---
Provision for income taxes 147.2 218.2 237.4
(+)
---
Other (income)/expense 56.1 106.6 109.7
(+)
---
Depreciation & amortization 150.9 301.6 304.1
(+)
EBITDA 635.1 1,034.2 1,091.4
(=)
Net sales 3,189.6 5,798.0 6,000.8
(/)
EBITDA margin 19.9% 17.8% 18.2%
(=)
1. Net income as of Dec. 31, 2010 excluding impairment and
discontinued operations. EBITDA as of Dec. 31, 2010 excluding
impairment.
Non-IAS/IFRS Measure: Net Debt to EBITDA ratio
Net debt to EBITDA ratio: Net debt means the sum of bank overdrafts,
current portion of long-term debt and long-term debt, less cash.
EBITDA represents net income before non-controlling interest, taxes,
other income/expense, depreciation and amortization.
The Company believes that EBITDA is useful to both management and
investors in evaluating the Company's operating performance compared
with that of other companies in its industry.
Our calculation of 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 ratio
of net debt to EBITDA is a measure used by management to assess
the Company's level of leverage, which affects our ability to refinance
our debt as it matures and incur additional indebtedness to invest in
new business opportunities.
The ratio also allows management to assess the cost of existing debt
since it affects the interest rates charged by the Company's lenders.
EBITDA and ratio of net debt to EBITDA are not measures of performance
under International Financial Reporting Standards as issued by the
International Accounting Standards Board (IAS/IFRS).
We include them in this presentation 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 matures and
incur additional indebtedness to invest in new business opportunities;
* 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 leverage;
* properly define the metrics used and confirm their calculation;
and
* share these measures with all investors at the same time.
EBITDA and ratio of net debt to EBITDA are not meant to be considered in
isolation or as a substitute for items appearing on our financial
statements prepared in accordance with IAS/IFRS.
Rather, these non-IAS/IFRS measures should be used as a supplement to
IAS/IFRS 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
IAS/IFRS and their definitions should be carefully reviewed and
understood by investors.
Investors should be aware that Luxottica Group's method of calculating
EBITDA and the ratio of net debt to EBITDA may differ from methods used
by other companies.
The Company recognizes that the usefulness of EBITDA and the ratio of
net debt to EBITDA as evaluative tools may have certain limitations,
including:
* EBITDA does 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 does 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 does 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 does not reflect cash expenditures or future requirements for
capital expenditures or contractual commitments;
* EBITDA does not reflect changes in, or cash requirements for,
working capital needs;
* EBITDA does not allow us to analyze the effect of certain recurring
and non-recurring items that materially affect our net income or loss;
and
* The ratio of net debt to 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 and the
ratio of net debt to EBITDA as two of several comparative tools,
together with IAS/IFRS measurements, to assist in the evaluation of
our operating performance and leverage.
See the table on the following page for a reconciliation of net debt to
long-term debt, which is the most directly comparable IAS/IFRS
financial measure, as well as the calculation of the ratio of net debt
to EBITDA.
For a reconciliation of EBITDA to net income, which is the most directly
comparable IAS/IFRS financial measure, see the table on the preceding
page.
Non-IAS/IFRS Measure: Net debt and Net debt / EBITDA
Millions of Euro
June 30, 2011 Dec. 31, 2010
------------- -------------
Long-term debt (+) 2,209.3 2,435.1
Current portion of long-
term debt (+) 230.4 197.6
Bank overdrafts (+) 187.1 158.6
------------------- ----- -----
Cash (-) (508.4) (679.9)
Net debt (=) 2,118.3 2,111.4
LTM EBITDA 1,091.4 1,034.2
Net debt/LTM EBITDA 1.9x 2.0x
=================== ==== ====
Net debt @ avg. exchange
rates (1) 2,187.9 2,116.2
Net debt @ avg. exchange
rates (1)/LTM EBITDA 2.0x 2.0x
1. Net debt figures are calculated using the average exchange rates
used to calculate the EBITDA figures.
Non-IAS/IFRS Measures: Free Cash Flow
Free cash flow net represents net income before non-controlling
interest, taxes, other income/expense, depreciation and amortization
(i.e. EBITDA - see table on the earlier page) plus or minus the
decrease/(increase)
in working capital over the prior period, less capital expenditures, plus
or minus interest income/(expense) and extraordinary items, minus taxes
paid. The Company believes that free cash flow is useful to both
management
and investors in evaluating the Company's operating performance compared
with other companies in its industry. In particular, our calculation of
free cash flow provides a clearer picture of the
Company's ability to generate net cash from operations, which is used for
mandatory debt service requirements, to fund discretionary investments,
pay dividends or pursue other strategic opportunities.
Free cash flow is not a measure of performance under International
Financial Reporting Standards as issued by the International Accounting
Standards Board (IAS/IFRS).
We include it in this presentation in order to:
* Improve transparency for investors;
* Assist investors in their assessment of the Company's operating
performance and its ability to generate cash from operations in excess
of its cash expenses;
* Ensure that this measure is fully understood in light of how the
Company evaluates its operating results;
* Properly define the metrics used and confirm their calculation; and
* Share this measure with all investors at the same time.
Free cash flow is not meant to be considered in isolation or as a
substitute for items appearing on our financial statements prepared in
accordance with IAS/IFRS.
Rather, this non-IAS/IFRS measure should be used as a supplement to
IAS/IFRS results to assist the reader in better understanding the
operational performance of the Company.
The Company cautions that this measure is not a defined term under IAS/
IFRS and its definition should be carefully reviewed and understood by
investors.
Investors should be aware that Luxottica Group's method of calculation of
free cash flow may differ from methods used by other companies.
The Company recognizes that the usefulness of free cash flow as an
evaluative tool may have certain limitations, including:
-- The manner in which the Company calculates free cash flow may differ
from that of other companies, which limits its usefulness as a
comparative measure;
-- Free cash flow does not represent the total increase or decrease in the
net debt balance for the period since it excludes, among other things,
cash
used for funding discretionary investments and to pursue strategic
opportunities during the period and any impact of the exchange rate
changes; and
-- Free cash flow can be subject to adjustment at the Company's discretion
if the Company takes steps or adopts policies that increase or diminish
its current liabilities and/or changes to working capital.
We compensate for the foregoing limitations by using free cash flow as
one of several comparative tools, together with IAS/IFRS measurements,
to assist in the evaluation of our operating performance.
See the table on the following page for a reconciliation of free cash
flow to EBITDA and the table on the earlier page for a reconciliation of
EBITDA to net income, which is the most directly comparable IAS/IFRS
financial measure.
Non-IAS/IFRS Measure: Free cash flow
Millions of Euro
2Q 2011
-------
EBITDA (1) 352
Change in working capital (8)
Capex (74)
Operating cash flow 270
Financial charges (2) (26)
Taxes (89)
Extraordinary charges (3) (1)
Free cash flow 154
1. EBITDA is not an IAS/IFRS measure; please see table on the
earlier page for a reconciliation of EBITDA to net income
2. Equals interest income minus interest expense
3. Equals extraordinary income minus extraordinary expense
Major currencies
Three months ended Six months ended Twelve months ended
June 30, 2010 June 30, 2010 December 31, 2010
------------- ------------- -----------------
Average
exchange
rates
per euro
1
--------
US$ 1.27075 1.32683 1.32572
AUD 1.44025 1.48477 1.44231
GBP 0.85239 0.86999 0.85784
CNY 8.67171 9.05673 8.97123
JPY 117.15460 121.31968 116.23857
--- --------- --------- ---------
Three months ended Six months ended
June 30, 2011 June 30, 2011
------------- -------------
Average
exchange
rates
per euro
1
--------
US$ 1.43906 1.40325
AUD 1.35500 1.35820
GBP 0.88274 0.86818
CNY 9.35094 9.17552
JPY 117.40762 114.96992
--- --------- ---------
SOURCE Luxottica Group S.p.A.
