Continued strong cash flow generation, at nearly Euro 80 million
for the quarter MILAN, Italy, May 7 /PRNewswire-FirstCall/ -- The
Board of Directors of Luxottica Group S.p.A. (MTA: LUX; NYSE: LUX),
a global leader in the design, manufacturing and distribution of
fashion, luxury and sports eyewear, approved today its consolidated
financial results for the three-month period ended March 31, 2009
in accordance with U.S. Generally Accepted Accounting Principles
(U.S. GAAP) and with International Financial Reporting Standards
(IFRS). First quarter 2009(1) - U.S. GAAP (In millions of Euro)
1Q09 1Q08 Change Net sales 1,312.3 1,398.7 -6.2% (-11.6% at
constant exch. rates) EBITDA(2) 229.6 275.3 -16.6% Operating income
156.7 207.1 -24.3% Net income 80.4 103.7 -22.5% Earnings per share
(in Euro) 0.18 0.23 -22.6% Before trademark amortization(2) 0.21
0.26 -20.1% Performance overview for the first quarter of 2009 The
first quarter of 2009 was a particularly challenging period for the
eyewear market, due to the structural changes that it is currently
undergoing. Demand and the market in general were affected by three
main factors: consumer attitudes, rapid reduction in inventories by
clients in all geographical areas and the slowdown in the global
economy. At the same time, it should be noted that some positive
signals are now being seen on all three of these fronts. "After the
first four months of 2009, we are already seeing a clear difference
between the January to February and March to April periods," said
Andrea Guerra, Chief Executive Officer of Luxottica Group. "In
fact, in March and April our results have stabilized in North
America, while improving in nearly all other markets. April ended
with sales results ahead of last year. In fact consolidated sales
year-to-date were down by only 3% compared to the same period last
year." The impact from the reduction in inventory levels by clients
was particularly evident in the results of the Wholesale division,
where sales were down by 19.0% after 20 consecutive quarters of
growth. For the first quarter of 2009, Luxottica posted sales of
Euro 1,312.3 million, compared to Euro 1,398.7 million for the
first quarter of 2008 (down by 6.2% at current exchange rates and
by 11.6% at constant exchange rates). The first quarter of the year
was also characterized by the continuation of the initiatives and
ongoing activities launched seven to eight months ago to optimize
the Group's equity structure and rapidly adjust its cost structure
to changing needs, the results of which are already being felt.
During the first quarter of 2009, Luxottica maintained a high level
of cash flow, with free cash flow generation(2) of nearly Euro 80
million (historically, cash flow generation for the first quarter
is negative due to seasonality); it completed adjustments to
manufacturing capacity and logistics, which resulted in strong
inventory reductions; and it continued projects to improve
efficiency that are scheduled to be completed by June 2009. The
second quarter will be critical in terms of achieving results for
the full year and it has already begun more positively than the
trend of the last few months. The macro-economic environment is
still not positive, but it is improving. Luxottica's approach
remains unchanged with a strong focus on all the levers that the
Group controls, with the speed and flexibility to ensure the
long-term success of its brand portfolio. Consolidated results for
the first quarter Consolidated sales were Euro 1,312.3 million,
compared to Euro 1,398.7 million for the first quarter of 2008
(down by 6.2% at current exchange rates and by 11.6% at constant
exchange rates). Consolidated EBITDA(2) was down year-over-year by
16.6% to Euro 229.6 million from Euro 275.3 million. Consolidated
EBITDA margin(2) for the period declined to 17.5% from 19.7% for
the first quarter of 2008. Consolidated operating income for the
quarter was Euro 156.7 million, compared to Euro 207.1 million
(down by 24.3%) for the first quarter of 2008. Consolidated
operating margin was 11.9% for the quarter while it was 14.8% for
the same period last year, thanks to particularly strong results by
the Wholesale Division for that period. Consolidated net income was
Euro 80.4 million for the quarter, compared to Euro 103.7 million
(down by 22.5%) for the same period last year. This result
reflected earnings per share (EPS) of Euro 0.18 (at an average
Euro/U.S. Dollar exchange rate of approximately 1.30). In terms of
EPS in Euro before trademark amortization(2), the decrease would
have been limited to 20.1%. Thanks to strong control over working
capital, the Group's cash flow generation for the quarter was
significant. However, due to the impact of exchange rate
fluctuations, at March 31, 2009, Luxottica's net debt(2) position
was Euro 2,963.4 million (compared to Euro 2,949.5 million at the
end of 2008), while the ratio of net debt to EBITDA(2) was 3.1x
(3.0x net of currency exchange effects), compared to 2.9x at
December 31, 2008. Wholesale Division The positive sales
performance in all markets by Oakley and the success of Ray-Ban's
optical collections only enabled the Group to partially offset the
effects of the challenging macro-economic environment, which
triggered strong measures by clients to cut inventory levels.
Wholesale sales for the period were Euro 501.6 million, compared to
Euro 619.6 million (down by 19.0% at current exchange rates and by
19.8% at constant exchange rates). Regarding sales in key
geographical regions, Luxottica's performance was substantially
positive in Continental Europe and South America, while sales were
down in Southern Europe, North America and the Far East. In March
and April, wholesale orders trended positively, reflecting recovery
in Europe. May, June and July will be key months for determining
the trend for the year. Operating income for the Wholesale Division
was Euro 105.3 million for the first quarter of 2009, (down by
32.8% from Euro 156.7 million for the first quarter of 2008, in
which the performance of the division was particularly strong,
while still representing an improvement over the final two quarters
of last year. The Wholesale Division's operating margin was 21.0%
for the quarter, compared to 25.3% for the first quarter in 2008.
Retail Division Sales for the Retail Division improved to Euro
810.8 million for the first quarter of 2009, from Euro 779.1
million for the same period in 2008 (up by 4.1% at current exchange
rates, down by 5.0% at constant exchange rates). Thanks to cost
control initiatives, the Retail Division's operating income was
substantially in line with the same quarter in the previous year
(Euro 83.6 million compared to Euro 84.5 million for last year's
first quarter, reflecting a decline of 1.1%). Consequently, the
Retail Division's operating margin for the first quarter of 2009
declined to 10.3%, from 10.8% for the first quarter of 2008. In
terms of comparable store sales(3), the optical business in North
America saw a decline (by 4.6%) during the first quarter of 2009,
notwithstanding the excellent results by Pearle Vision, Sears
Optical and Target Optical. In Australia, the trend in comparable
store sales(3) was positive once again (up by 1.5%). Sunglass Hut,
the Group's sun specialty chain that operates across several
geographic regions, reported overall comparable store sales(3) down
by 10.3% in the first quarter of 2009 compared to the same period
last year, with highly positive trends in Australia and New
Zealand, South Africa and the UK but again negative in North
America. Results for the first quarter of 2009 will be discussed
today in a conference call with the financial community starting at
6:30 PM CET. The audio portion and related slide presentation will
be available to all via live webcast at http://www.luxottica.com/.
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. Notes to the
press release 1. All comparisons, including percentage changes, are
between the three-month periods ended March 31, 2009 and 2008, in
accordance with U.S. GAAP. 2. EBITDA, EBITDA margin, free cash
flow, net debt, the ratio of net debt to EBITDA and EPS before
trademark amortization are all non-U.S. GAAP measures. For
additional disclosure regarding such measures, please refer to the
tables attached. 3. 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. Company Media and Investor
Relations Contacts About Luxottica Group S.p.A. Luxottica Group is
a global leader in premium fashion, luxury and sports eyewear, with
over 6,250 optical and sun retail stores in North America,
Asia-Pacific, China, South Africa and Europe and a strong and well
balanced brand portfolio. Luxottica's key house brands include
Ray-Ban, the best known sun eyewear brand in the world, Oakley,
Vogue, Persol, Oliver Peoples, Arnette and REVO, while license
brands include Bvlgari, Burberry, Chanel, Dolce & Gabbana,
Donna Karan, Polo Ralph Lauren, Prada, Salvatore Ferragamo, Tiffany
and Versace. In addition to a global wholesale network covering 130
countries, the Group manages leading retail brands such as
LensCrafters and Pearle Vision in North America, OPSM and Laubman
& Pank in Australasia, LensCrafters in Greater China and
Sunglass Hut globally. The Group's products are designed and
manufactured in six Italy-based manufacturing plants, two
wholly-owned plants in China and a sports sunglass production
facility in the U.S.. In 2008, Luxottica Group posted consolidated
net sales of �?�5.2 billion. Additional information on the Group is
available at http://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 manage
the effect of the poor current global economic conditions on our
business and 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. LUXOTTICA GROUP CONSOLIDATED FINANCIAL
HIGHLIGHTS FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2009 AND
MARCH 31, 2008 KEY FIGURES IN THOUSANDS OF EURO (3)
------------------------------------ 2009 2008 % Change NET SALES
1,312,334 1,398,703 -6.2% NET INCOME 80,394 103,705 -22.5% BASIC
EARNINGS PER SHARE (ADS) (2): 0.18 0.23 -22.6% EPS PRE-TRADEMARK
AMORTIZATION (2) (4): 0.21 0.26 -20.1% KEY FIGURES IN THOUSANDS OF
U.S. DOLLARS (1) (3) -------------------------------- 2009 2008 %
Change NET SALES 1,709,840 2,094,698 -18.4% NET INCOME 104,746
155,309 -32.6% BASIC EARNINGS PER SHARE (ADS)(2): 0.23 0.34 -32.7%
EPS PRE-TRADEMARK AMORTIZATION (2) (4): 0.27 0.38 -30.5% Notes :
2009 2008 (1) Average exchange rate (in U.S. Dollars per Euro)
1.3029 1.4976 (2) Weighted average number of outstanding shares
457,031,838 456,360,623 (3) Except earnings per share (ADS), which
are expressed in Euro and U.S. Dollars, respectively (4) EPS before
trademark amortization is not a US-GAAP measure. For additional
disclosure regarding non-US GAAP measures and a reconciliation to
US GAAP measures, see the tables attached. LUXOTTICA GROUP
CONSOLIDATED INCOME STATEMENT FOR THE THREE-MONTH PERIODS ENDED
MARCH 31, 2009 AND MARCH 31, 2008 In thousands of % of % of Euro
(1) 2009 sales 2008 (2) sales % Change NET SALES 1,312,334 100.0%
1,398,703 100.0% -6.2% COST OF SALES (452,049) (472,565) GROSS
PROFIT 860,285 65.6% 926,138 66.2% -7.1% OPERATING EXPENSES:
SELLING EXPENSES (448,692) (433,122) ROYALTIES (25,812) (34,973)
ADVERTISING EXPENSES (79,049) (92,772) GENERAL AND ADMINISTRATIVE
EXPENSES (129,049) (137,013) TRADEMARK AMORTIZATION (21,017)
(21,201) TOTAL (703,618) (719,081) OPERATING INCOME 156,667 11.9%
207,057 14.8% -24.3% OTHER INCOME (EXPENSE): INTEREST EXPENSES
(28,672) (34,356) INTEREST INCOME 2,004 2,941 OTHER - NET (1,759)
(5,173) OTHER INCOME (EXPENSES)-NET (28,427) (36,589) INCOME BEFORE
PROVISION FOR INCOME TAXES 128,239 9.8% 170,469 12.2% -24.8%
PROVISION FOR INCOME TAXES (43,536) (59,664) INCOME BEFORE MINORITY
INTEREST IN CONSOLIDATED SUBSIDIARIES 84,703 110,805 MINORITY
INTEREST IN INCOME OF CONSOLIDATED SUBSIDIARIES (4,309) (7,099) NET
INCOME 80,394 6.1% 103,705 7.4% -22.5% BASIC EARNINGS PER SHARE
(ADS): 0.18 0.23 FULLY DILUTED EARNINGS PER SHARE (ADS): 0.18 0.23
WEIGHTED AVERAGE NUMBER OF OUTSTANDING SHARES 457,031,838
456,360,623 FULLY DILUTED AVERAGE NUMBER OF SHARES 457,079,017
459,711,568 Notes : (1) Except earnings per share (ADS), which are
expressed in Euro (2) Certain amounts of 2008 have been
reclassified to conform to 2009 presentation LUXOTTICA GROUP
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2009 AND DECEMBER 31,
2008 March 31, December 31, In thousands of Euro 2009 2008 CURRENT
ASSETS: CASH 227,008 288,450 MARKETABLE SECURITIES 484 23,550
ACCOUNTS RECEIVABLE 685,315 630,018 SALES AND INCOME TAXES
RECEIVABLE 138,536 151,609 INVENTORIES 580,249 570,987 PREPAID
EXPENSES AND OTHER 164,742 144,054 DEFERRED TAX ASSETS - CURRENT
121,620 131,907 TOTAL CURRENT ASSETS 1,917,954 1,940,575 PROPERTY,
PLANT AND EQUIPMENT - NET 1,196,971 1,170,698 OTHER ASSETS
INTANGIBLE ASSETS - NET 4,067,758 3,928,804 INVESTMENTS 5,657 5,503
OTHER ASSETS 168,892 175,234 SALES AND INCOME TAXES RECEIVABLE 965
965 DEFERRED TAX ASSETS - NON-CURRENT 91,658 83,447 TOTAL OTHER
ASSETS 4,334,929 4,193,952 TOTAL 7,449,854 7,305,225 CURRENT
LIABILITIES: BANK OVERDRAFTS 341,220 432,465 CURRENT PORTION OF
LONG-TERM DEBT 395,583 286,213 ACCOUNTS PAYABLE 392,446 398,080
ACCRUED EXPENSES AND OTHER 408,094 390,783 ACCRUAL FOR CUSTOMERS'
RIGHT OF RETURN 34,845 31,363 INCOME TAXES PAYABLE 18,069 18,353
TOTAL CURRENT LIABILITIES 1,590,258 1,557,255 LONG-TERM
LIABILITIES: LONG-TERM DEBT 2,453,633 2,519,289 LIABILITY FOR
TERMINATION INDEMNITIES 54,920 55,522 DEFERRED TAX LIABILITIES -
NON-CURRENT 244,704 233,551 OTHER 407,364 385,687 TOTAL LONG-TERM
LIABILITIES 3,160,621 3,194,049 COMMITMENTS AND CONTINGENCIES:
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES 49,830 47,328
SHAREHOLDERS' EQUITY: 463,498,133 ORDINARY SHARES AUTHORIZED AND
ISSUED - 457,063,347 SHARES OUTSTANDING 27,810 27,802 NET INCOME
80,394 379,722 RETAINED EARNINGS 2,540,941 2,099,069 TOTAL
SHAREHOLDERS' EQUITY 2,649,145 2,506,593 TOTAL 7,449,854 7,305,225
LUXOTTICA GROUP CONSOLIDATED FINANCIAL HIGHLIGHTS FOR THE
THREE-MONTH PERIODS ENDED MARCH 31, 2009 AND MARCH 31, 2008 -
SEGMENTAL INFORMATION - Inter- Segment In thousands of Euro
Manufacturing Transactions and and Corporate Wholesale Retail Adj.
Consolidated 2009 Net Sales 501,569 810,765 1,312,334 Operating
Income 105,280 83,581 (32,194) 156,667 % of sales 21.0% 10.3% 11.9%
Capital Expenditures 19,341 25,303 44,644 Depreciation &
Amortization 18,682 33,219 21,017 72,917 Assets 1,976,862 1,171,210
4,301,781 7,449,854 2008 Adjusted (1) Net Sales 619,561 779,142
1,398,703 Operating Income 156,732 84,482 (34,157) 207,057 % of
sales 25.3% 10.8% 14.8% Capital Expenditures 20,675 29,011 49,686
Depreciation & Amortization 17,325 29,737 21,201 68,263 Assets
2,033,559 988,824 3,820,717 6,843,101 2008 Reported 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 Expenditure
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 Notes
: (1) In 2009 the Company uses a new method to report Segmental
information. This method is in compliance with SFAS No. 131
requirements. For the purpose of providing comparability with
financial information from previous periods, the Company has
reclassified 2008 segment data prepared in accordance with the
revised methodology. 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, 2009
CONSOLIDATED INCOME STATEMENT FOR THE THREE MONTH PERIOD ENDED
MARCH 31, 2009 In thousands of Euro US GAAP 2009 IFRS 2 IAS 2 IFRS
3 IAS 19 Stock Business Employee option Inventories combination
benefit NET SALES 1,312,334 COST OF SALES (452,049) 1,061 GROSS
PROFIT 860,285 1,061 OPERATING EXPENSES: SELLING EXPENSES (448,692)
(1,432) ROYALTIES (25,812) ADVERTISING EXPENSES (79,049) GENERAL
AND ADMINISTRATIVE EXPENSES (129,049) (1,558) (768) 405 TRADEMARK
AMORTIZATION (21,017) TOTAL (703,618) (1,558) (1,432) (768) 405
OPERATING INCOME 156,667 (1,558) (371) (768) 405 OTHER INCOME
(EXPENSE): INTEREST EXPENSES (28,672) (715) INTEREST INCOME 2,004
OTHER - NET (1,759) OTHER INCOME (EXPENSES)-NET (28,427) (715)
INCOME BEFORE PROVISION FOR INCOME TAXES 128,239 (1,558) (371)
(1,483) 405 PROVISION FOR INCOME TAXES (43,536) 144 261 (173)
INCOME BEFORE MINORITY INTEREST IN INCOME OF CONSOLIDATED
SUBSIDIARIES 84,703 (1,558) (227) (1,222) 232 MINORITY INTEREST IN
INCOME OF CONSOLIDATED SUBSIDIARIES (4,309) 1,722 NET INCOME 80,394
(1,558) (227) 500 232 BASIC EARNINGS PER SHARE (ADS) (1) 0.18 FULLY
DILUTED EARNINGS PER SHARE (ADS) (1) 0.18 WEIGHTED AVERAGE NUMBER
OF OUTSTANDING SHARES 457,031,838 FULLY DILUTED AVERAGE NUMBER OF
SHARES 457,079,017 In thousands of Euro IAS / IFRS IAS 39 Total
2009 Derivatives / Amortized adj. cost Other IAS-IFRS NET SALES
1,312,334 COST OF SALES 1,061 (450,988) GROSS PROFIT 1,061 861,346
OPERATING EXPENSES: SELLING EXPENSES 26 (1,407) (450,098) ROYALTIES
(25,812) ADVERTISING EXPENSES (228) (228) (79,277) GENERAL AND
ADMINISTRATIVE EXPENSES (1,920) (130,969) TRADEMARK AMORTIZATION
(21,017) TOTAL (203) (3,555) (707,174) OPERATING INCOME (203)
(2,494) 154,173 OTHER INCOME (EXPENSE): INTEREST EXPENSES (30)
(403) (1,148) (29,820) INTEREST INCOME 2,004 OTHER - NET 154 154
(1,605) OTHER INCOME (EXPENSES)-NET 124 (403) (994) (29,421) INCOME
BEFORE PROVISION FOR INCOME TAXES 124 (606) (3,488) 124,751
PROVISION FOR INCOME TAXES 176 (288) 121 (43,415) INCOME BEFORE
MINORITY INTEREST IN INCOME OF CONSOLIDATED SUBSIDIARIES 301 (893)
(3,367) 81,336 MINORITY INTEREST IN INCOME OF CONSOLIDATED
SUBSIDIARIES 1,722 (2,587) NET INCOME 301 (893) (1,645) 78,750
BASIC EARNINGS PER SHARE (ADS) (1) 0.17 FULLY DILUTED EARNINGS PER
SHARE (ADS) (1) 0.17 WEIGHTED AVERAGE NUMBER OF OUTSTANDING SHARES
457,031,838 FULLY DILUTED AVERAGE NUMBER OF SHARES 457,079,017
Notes : (1) Except earnings per share (ADS), which are expressed in
Euro Non-U.S. GAAP Measure: EBITDA and EBITDA margin EBITDA
represents operating income before 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 accounting principles generally
accepted in the United States (U.S. GAAP). 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
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 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 U.S. GAAP measurements, to
assist in the evaluation of our operating performance and leverage.
See the tables on the following pages for a reconciliation of
EBITDA to operating income, which is the most directly comparable
U.S. GAAP financial measure, as well as the calculation of EBITDA
margin on net sales. Non-U.S. GAAP Measure: EBITDA Millions of Euro
LTM 1Q09 1Q08 FY08 March 31, 2009 + (-) + Operating income (+)
156.7 (207.1) 749.8 699.4 Depreciation & amortization 72.9
(68.3) 264.9 269.5 (+) EBITDA 229.6 (275.3) 1,014.7 969.0 (=)
EBITDA at avg exchange 229.6 (284.2) 1,064.8 1,010.1 rates for the
period (1) 1. Calculated using the 3-month average exchange rate as
of March 31, 2009 Non-U.S. GAAP Measure: EBITDA and EBITDA margin
Millions of Euro 1Q09 1Q08 Operating income (+) 156.7 207.1
Depreciation & amortization (+) 72.9 68.3 (+) EBITDA 229.6
275.3 (=) Net sales 1,312.3 1,398.7 (/) EBITDA margin 17.5% 19.7%
(=) Non-U.S. GAAP 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 operating income before 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 accounting
principles generally accepted in the United States (U.S. GAAP). 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 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 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 U.S. GAAP
measurements, to assist in the evaluation of our operating
performance and leverage. See the tables on the following pages for
a reconciliation of net debt to long-term debt, which is the most
directly comparable U.S. GAAP financial measure, as well as the
calculation of the ratio of net debt to EBITDA. For a
reconciliation of EBITDA to operating income, which is the most
directly comparable U.S. GAAP financial measure, see the tables on
the preceding pages. Non-U.S. GAAP Measure: Net debt and Net debt /
EBITDA Millions of Euro Mar 31, 2009 Dec 31, 2008 Long-term debt
2,453.6 2,519.3 (+) Current portion of long-term debt (+) 395.6
286.2 (+) Bank overdrafts (+) 341.2 432.5 Cash (-) -227.0 -288.5
Net debt (=) 2,963.4 2,949.5 EBITDA 969.0 1,014.7 Net debt/EBITDA
3.1x 2.9x Net debt @ avg. exchange rates (1) 2,993.5 2,821.2 for
the period EBITDA at avg. exchange rates (1) 1,010.1 1014.7 Net
debt / EBITDA @ avg. exchange rates (1) 3.0x 2.8x 1. Calculated
using the 3-month average exchange rate as of March 31, 2009 and
the 12-month average exchange rate as of December 31, 2008,
respectively Non-U.S. GAAP Measures: EPS before Trademark
Amortization 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 with 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 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. 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, this
non-GAAP measure 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
this measure is not a defined term under U.S. GAAP and its
definition 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 a necessary 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 tables on
the following pages for a reconciliation of EPS before trademark
amortization to EPS, which is the most directly comparable U.S.
GAAP financial measure. Non-U.S. GAAP Measure: EPS before Trademark
Amortization Millions of Euro, unless otherwise noted 1Q09 1Q08
Change Trademark amortization and other similar intangible assets
21 21 (+) Taxes on trademark amortization and other similar
intangible assets (8) (8) (-) Trademark amortization and other
similar intangible assets, net of taxes 13 13 (=) Average number of
shares outstanding as of March 31 (in thousands) (/) 457,032
456,361 Trademark amortization and other similar intangible assets,
net of taxes, per share (=) 0.03 0.03 EPS (+) 0.18 0.23 -22.6% EPS
before trademark amortization and other similar intangible assets,
net of taxes (=) 0.21 0.26 -20.1% Non-US GAAP Measures: Free Cash
Flow Free cash flow represents income from operations before
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 may be used, among other things, to fund
discretionary investments, pay dividends or pursue other strategic
opportunities. Free cash flow 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 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 U.S. GAAP.
Rather, this non-GAAP measure 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
this measure is not a defined term under U.S. GAAP 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 U.S. GAAP 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 operating income,
which is the most directly comparable U.S. GAAP financial measure.
Non-U.S. GAAP Measure: Free cash flow Millions of Euro 1Q09 EBITDA
(1) 230 Change working capital (35) Capex (45) Operating cash flow
150 Financial charges (2) (27) Taxes (44) Extraordinary charges (3)
(2) Free cash flow 78 1. EBITDA is not a U.S. GAAP measure; please
see table on the earlier page for a reconciliation of EBITDA to
operating income 2. Equal interest income minus interest expenses
3. Equal extraordinary income minus extraordinary expenses
DATASOURCE: Luxottica Group S.p.A. CONTACT: Ivan Dompe, Group
Corporate Communications Director, Tel.: +39 (02) 8633 4726, , Luca
Biondolillo, Group Director of International Communications, Tel.:
+39 (02) 8633 4668, ; Alessandra Senici, Group Investor Relations
Director, Tel.: +39 (02) 8633 4718, Web Site:
http://www.luxottica.com/
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