Luxottica’s cash dividend for FY 2007 set to increase by a further 17%
- The Group posts record €492 million in consolidated net income for the year -
Milan, Italy – March 13, 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 consolidated results in accordance with both International Financial Reporting
Standards (IFRS) and U.S. Generally Accepted Accounting Principles (U.S. GAAP) for the
twelve-month period ended December 31, 2007 and resolved to propose a 17 percent
increase in the cash dividend to be paid for fiscal year 2007 to €0.49 per ordinary share, as
compared to 2006. The dividend payment will be submitted to shareholders for approval at
the Group’s upcoming Ordinary Shareholders’ Meeting to be held in May.
At the Ordinary Meeting, the Board of Directors will also submit to shareholders for
approval, in accordance with Italian law, Luxottica Group S.p.A.’s unconsolidated statutory
financial statements for fiscal year 2007 in accordance with IFRS.
Luxottica Group consolidated sales results and other key figures for the respective periods
were already announced on January 29 and February 7 of this year. Other financial
highlights for the three- and twelve-month periods ended December 31, 2007, in
accordance with U.S. GAAP, are listed below. A detailed balance sheet, income statements
and other financial tables for both periods are also attached to this release for
perspective.
Fiscal year 2007(1)
• Consolidated sales: €4,966 million (+6.2%) (+12.5% excluding effect of exchange rates),
including €87 million of Oakley sales (6 weeks)
• Sales by Division (excluding Oakley):
- Retail sales: €3,234 million (-1.8%) (+5.6% excluding effect of exchange rates);
- Total wholesale sales: €1,993 million (+16.2%) (+20,2% excluding effect of exchange
rates)
• Consolidated operating income: €833 million (+10.2%); Operating margin: 16.8%
• Operating income by Division (excluding Oakley)
- Retail operating income: €362 million (-16.2%); Retail operating margin: 11.2%
- Wholesale operating income: €528 million (+18.4%); Wholesale operating margin: 26.5%
• Consolidated net income(2): €492 million (+14.3%); Net margin: 9.9%
• Earnings per share: €1.08 (US$1.48 per ADS) EPS pre trademark amortization €1,17
(US$1,60)
1
Fourth quarter of 2007(1)
• Consolidated sales: €1,189 million (+7.0%) (+16.1% excluding effect of exchange rates),
including €87 million of Oakley sales (6 weeks)
• Sales by Division (excluding Oakley):
- Retail sales: €714 million (-7.2%) (+2.8% excluding effect of exchange rates);
- Total wholesale sales: €478 million (+15.6%) (+21.7% excluding effect of exchange
rates)
• Consolidated operating income: €152 million (-8.0%); Operating margin: 12.8%
• Operating income by Division (excluding Oakley)
- Retail operating income: €59 million (-31.7%); Retail operating margin: 8.2%
- Wholesale operating income: €110 million (+5.5%); Wholesale operating margin: 23.0%
• Consolidated net income: €97 million (-4.0%)3; Net margin: 8.1%
• Earnings per share: €0.21 (US$0.31 per ADS) EPS pre trademark amortization
€0,24 (US$0,35)
Andrea Guerra, chief executive officer of Luxottica Group, commented: “We are extremely
pleased with our performance in 2007, as we were able to post record results for the year
in terms of sales, operating margin and net income despite the increasingly challenging
macroeconomic environment. Additionally, as demonstrated by our year-over-year
improvement in consolidated net income of approximately 15 percent, we remain focused
on generating value for our shareholders. The Board will propose a 17 percent year-overyear
increase in the cash dividend to be paid for fiscal 2007, reflecting a payout ratio of 45
percent.
“Within the existing environment, key elements of our ability to continue to grow were
once again the strength of our business model, the importance of the ongoing program of
investment, the extremely well-articulated brand and retail portfolios, as well as the
increasing geographical diversification and penetration.
“With respect to North America, we are especially pleased with the performance of our
overall business in that market, which posted a six percent growth in sales in U.S. Dollars
for the year. In particular, the performance of the retail division in that market was
satisfactory, especially when compared with that of other comparable leading retailers in
that market.
“Today we are fully focused on delivering results at the operating level and on the
integration of the Oakley business. During the first two months of the current year, our
wholesale business is showing growth in all markets worldwide, while the retail business
remains steady overall. With respect to the Oakley business, we continue to be extremely
pleased with the speed at which we are completing many strategic projects. Going
forward, we are expecting that this business will contribute the most during the second
and third quarters of the year, when it has historically enjoyed its strongest positive
seasonality.”
Luxottica Group’s consolidated net outstanding debt on December 31, 2007, was €2,872
million, reflecting a consolidated net debt to pro-forma EBITDA ratio(3) of 2.5x.
2
Proposed dividend for fiscal year 2007
The Board of Directors today also scheduled the Company’s Ordinary Shareholders’ Meeting
and Extraordinary Shareholders’ Meeting for May 13, 2008, on first call, and for May 14,
2008, on second call.
At the Ordinary Meeting, the Board of Directors will propose to shareholders a 17 percent
increase in the cash dividend to be paid for fiscal year 2007 to €0.49 per ordinary share.
This will represent a dividend payout ratio of 45 percent, in line with that for fiscal year
2006. Last year, shareholders approved the payment of a cash dividend of €0.42 per
ordinary share or ADS.
Other Board resolutions
The Board of Directors also resolved today to submit to the Ordinary Shareholders’ Meeting
of the Company a proposal to authorize a program to repurchase and dispose of up to
18,500,000 of Luxottica’s ordinary shares, representing 4.00 percent of the Company’s
issued and outstanding share capital. Included in the authorization requested are 6,434,786
of the Company’s ordinary shares held by Arnette Optics Illusions Inc., a company
controlled by Luxottica Group.
The authorization requested at the Ordinary Shareholders’ Meeting of the Company is
intended to provide the Company with treasury shares in order to efficiently manage the
Company’s capital and to implement the performance share plan to be granted to the
Group’s top managers, under the terms described more fully below.
The maximum and minimum price of the share purchases will be equal to the market price
of Luxottica’s ordinary shares on the Milan Stock Exchange’s Mercato Telematico Azionario
(MTA) on the day preceding the relevant purchase, respectively increased or decreased by
10 percent.
The authorization to purchase ordinary shares is required for a period of 18 months
beginning on the date that the Ordinary Shareholders’ Meeting approves the relevant
resolution.
The Board of Directors also resolved today to submit to the Ordinary Shareholders’ Meeting
a proposal to approve a share incentive plan (the "2008 Performance Shares Plan") for the
Group’s top managers to be identified by the Company’s Board of Directors.
The plan is intended to strengthen the loyalty of the Group’s key employees and to
recognize their contributions to the success of the Group on a medium- to long-term basis.
The beneficiaries of the plan will be granted the right to receive ordinary shares of the
Company, without consideration, at the end of a three-year vesting period and subject to
achievement of certain Group performance targets, to be determined by the Company’s
Board of Directors.
The plan will have a term of five years, during which the Board of Directors may resolve to
issue different grants to the plan's beneficiaries. The plan covers a maximum of 6,500,000
ordinary shares of the Company. Each annual grant of performance shares will not exceed
2,000,000 ordinary shares.
3
In accordance with Section 2, art. 154 bis of Legislative Decree n. 58/1998 of the Italian Law,
Enrico Cavatorta, Luxottica Group’s chief financial officer, confirms that the financial data
included in this press release corresponds to that included in the Company's 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 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 and Versace, and 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, Pearle Vision and Sunglass Icon, 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 and in the only two
China-based plants wholly-owned by a premium eyewear manufacturer. 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.
4
Luxottica Group S.p.A. media and investor relations contacts
Media Relations:
Carlo Fornaro, Group Corporate Communications Director
Tel.: +39 (02) 8633 4062
Email: MediaRelations@luxottica.com
Luca Biondolillo, Head of International Communications
Tel.: +39 (02) 8633 4668
Email: LucaBiondolillo@Luxottica.com
Investor Relations:
Alessandra Senici, Group Investor Relations Director
Tel.: +39 (02) 8633 4069
Email: Investorrelations@Luxottica.com
- TABLES TO FOLLOW –
1 All comparisons, including percentage changes, are between the three- and twelve-month periods
ended December 31, 2007 and 2006.
2 Includes a non-recurring gain related to the sale of a real estate property in Milan, Italy in May
2007. The impact of the sale was a gain of approx. €20 million before taxes or approx. €13 million
after taxes (equivalent to EPS of €0.02).
3 The ratio of net debt to EBITDA is a non-U.S. GAAP measure. For additional disclosure regarding
net debt to EBITDA, please refer to the tables accompanying this press release.
5
KEY FIGURES IN THOUSANDS OF EURO (3)
2007 2006 (5) % Change
NET SALES 1,188,500 1,110,553 7.0%
NET INCOME FROM CONTINUING OPERATIONS (4) 96,726 100,743 -4.0%
NET INCOME 96,726 95,689 1.1%
BASIC EARNINGS PER SHARE (ADS) (2):
FROM CONTINUING OPERATIONS (4) 0.21 0.22 -4.5%
EPS PRE-TRADEMARK AMORTIZATION:
FROM CONTINUING OPERATIONS (4) 0.24 0.25 -4.0%
KEY FIGURES IN THOUSANDS OF U.S. DOLLARS (1) (3)
2007 2006 % Change
NET SALES 1,721,662 1,431,391 20.3%
NET INCOME FROM CONTINUING OPERATIONS (4) 140,118 129,847 7.9%
NET INCOME 140,118 123,333 13.6%
BASIC EARNINGS PER SHARE (ADS) (2):
FROM CONTINUING OPERATIONS (4) 0.31 0.29 7.3%
EPS PRE-TRADEMARK AMORTIZATION:
FROM CONTINUING OPERATIONS (4) 0.35 0.32 9.4%
Notes: 2007 2006
(1) Average exchange rate (in U.S. Dollars per Euro) 1.4486 1.2889
(2) Weighted average number of outstanding shares 456,047,831 453,587,473
(3) Except earnings per share (ADS), which are expressed in Euro and U.S. Dollars, respectively
(4) Results of Things Remembered, a former specialty gift business that was sold in September 2006, are reclassified as discontinued operations and are not
included as cash flows from continuing operations for 2006
LUXOTTICA GROUP
CONSOLIDATED FINANCIAL HIGHLIGHTS
FOR THE THREE-MONTH PERIODS ENDED
DECEMBER 31, 2007 AND DECEMBER 31, 2006
Luxottica Group 4Q07, Table 1 of 10
KEY FIGURES IN THOUSANDS OF EURO (3)
2007 2006 % Change
NET SALES 4,966,054 4,676,156 6.2%
NET INCOME FROM CONTINUING OPERATIONS (4) 492,204 430,705 14.3%
NET INCOME 492,204 424,286 16.0%
BASIC EARNINGS PER SHARE (ADS) (2):
FROM CONTINUING OPERATIONS (4) 1.08 0.95 13.7%
EPS PRE-TRADEMARK AMORTIZATION:
FROM CONTINUING OPERATIONS (4) 1.17 1.04 12.5%
KEY FIGURES IN THOUSANDS OF U.S. DOLLARS (1) (3)
2007 2006 % Change
NET SALES 6,805,977 5,869,979 15.9%
NET INCOME FROM CONTINUING OPERATIONS (4) 674,566 540,664 24.8%
NET INCOME 674,566 532,605 26.7%
BASIC EARNINGS PER SHARE (ADS) (2):
FROM CONTINUING OPERATIONS (4) 1.48 1.19 24.1%
PRE-TRADEMARK AMORTIZATION:
FROM CONTINUING OPERATIONS (4) 1.60 1.30 23.1%
Notes: 2007 2006
(1) Average exchange rate (in U.S. Dollars per Euro) 1.3705 1.2553
(2) Weighted average number of outstanding shares 455,184,797 452,897,854
(3) Except earnings per share (ADS), which are expressed in Euro and U.S. Dollars, respectively
(4) Results of Things Remembered, a former specialty gift business that was sold in September 2006,
are reclassified as discontinued operations and are not included as cash flows from continuing operations for 2006
LUXOTTICA GROUP
CONSOLIDATED FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED
DECEMBER 31, 2007 AND DECEMBER 31, 2006
Luxottica Group 4Q07, Table 2 of 7
In thousands of Euro (1) 4Q07 % of sales 4Q06 (2) (3) % of sales % Change
NET SALES 1,188,500 100.0% 1,110,553 100.0% 7.0%
COST OF SALES (423,605) (397,119)
GROSS PROFIT 764,895 64.4% 713,434 64.2% 7.2%
OPERATING EXPENSES:
SELLING EXPENSES (391,988) (368,966)
ROYALTIES (33,009) (28,383)
ADVERTISING EXPENSES (81,600) (62,611)
GENERAL AND ADMINISTRATIVE EXPENSES (86,154) (71,061)
TRADEMARK AMORTIZATION (20,463) (17,487)
TOTAL (613,214) (548,509)
OPERATING INCOME 151,681 12.8% 164,925 14.9% -8.0%
OTHER INCOME (EXPENSE):
INTEREST EXPENSES (30,313) (16,421)
INTEREST INCOME 6,019 3,676
OTHER - NET 16,109 (4,364)
OTHER INCOME (EXPENSES)-NET (8,185) (17,109)
INCOME BEFORE PROVISION FOR
INCOME TAXES 143,496 12.1% 147,816 13.3% -2.9%
PROVISION FOR INCOME TAXES (44,314) (45,708)
INCOME BEFORE MINORITY INTEREST IN
INCOME OF CONSOLIDATED SUBSIDIARIES 99,182 102,108
MINORITY INTEREST IN INCOME
OF CONSOLIDATED SUBSIDIARIES (2,455) (1,364)
NET INCOME FROM CONTINUING OPERATIONS (2) 96,726 8.1% 100,743 9.1% -4.0%
DISCONTINUED OPERATIONS (5,054)
NET INCOME 96,726 8.1% 95,689 8.6% 1.1%
BASIC EARNINGS PER SHARE (ADS):
FROM CONTINUING OPERATIONS (1) (2) 0.21 0.22
TOTAL (1) 0.21 0.21
FULLY DILUTED EARNINGS PER SHARE (ADS):
FROM CONTINUING OPERATIONS (1) (2) 0.21 0.22
TOTAL (1) 0.21 0.21
WEIGHTED AVERAGE NUMBER OF
OUTSTANDING SHARES 456,047,831 453,587,473
FULLY DILUTED AVERAGE NUMBER OF SHARES 458,478,516 457,044,068
Notes :
(1) Except earnings per share (ADS), which are expressed in Euro
(2) Results of Things Remembered, a former specialty gift business that was sold in September 2006,
are reclassified as discontinued operations and are not included as cash flows from continuing operations for 2006
LUXOTTICA GROUP
CONSOLIDATED INCOME STATEMENT
FOR THE THREE-MONTH PERIODS ENDED
DECEMBER 31, 2007 AND DECEMBER 31, 2006
(3) Certain amounts of 2006 have been reclassified to conform to 2007 presentation
Luxottica Group 4Q07, Table 3 of 10
In thousands of Euro (1) 2007 % of sales 2006 (2) (3) % of sales % Change
NET SALES 4,966,054 100.0% 4,676,156 100.0% 6.2%
COST OF SALES (1,575,618) (1,487,700)
GROSS PROFIT 3,390,436 68.3% 3,188,456 68.2% 6.3%
OPERATING EXPENSES:
SELLING EXPENSES (1,591,438) (1,525,760)
ROYALTIES (129,644) (104,579)
ADVERTISING EXPENSES (348,198) (318,128)
GENERAL AND ADMINISTRATIVE EXPENSES (423,878) (422,696)
TRADEMARK AMORTIZATION (63,965) (61,306)
TOTAL (2,557,123) (2,432,468)
OPERATING INCOME 833,313 16.8% 755,987 16.2% 10.2%
OTHER INCOME (EXPENSE):
INTEREST EXPENSES (89,498) (70,622)
INTEREST INCOME 17,087 9,804
OTHER - NET 19,780 (16,992)
OTHER INCOME (EXPENSES)-NET (52,631) (77,810)
INCOME BEFORE PROVISION FOR
INCOME TAXES 780,681 15.7% 678,177 14.5% 15.1%
PROVISION FOR INCOME TAXES (273,501) (238,757)
INCOME BEFORE MINORITY INTEREST IN
INCOME OF CONSOLIDATED SUBSIDIARIES 507,180 439,420
MINORITY INTEREST IN INCOME
OF CONSOLIDATED SUBSIDIARIES (14,976) (8,715)
NET INCOME FROM CONTINUING OPERATIONS (2) 492,204 9.9% 430,705 9.2% 14.3%
DISCONTINUED OPERATIONS (6,419)
NET INCOME 492,204 9.9% 424,286 9.1% 16.0%
BASIC EARNINGS PER SHARE (ADS):
FROM CONTINUING OPERATIONS (1) (2) 1.08 0.95
TOTAL (1) 1.08 0.94
FULLY DILUTED EARNINGS PER SHARE (ADS):
FROM CONTINUING OPERATIONS (1) (2) 1.07 0.94
TOTAL (1) 1.07 0.93
WEIGHTED AVERAGE NUMBER OF
OUTSTANDING SHARES 455,184,797 452,897,854
FULLY DILUTED AVERAGE NUMBER OF SHARES 458,530,609 456,185,650
Notes:
(1) Except earnings per share (ADS), which are expressed in Euro
(2) Results of Things Remembered, a former specialty gift business that was sold in September 2006,
are reclassified as discontinued operations and are not included as cash flows from continuing operations for 2006
(3) Certain amounts of 2006 have been reclassified to conform to 2007 presentation
LUXOTTICA GROUP
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED
DECEMBER 31, 2007 AND DECEMBER 31, 2006
Luxottica Group 4Q07, Table 4 of 10
In thousands of Euro December 31, 2007 December 31, 2006
CURRENT ASSETS:
CASH 302,894 339,122
MARKETABLE SECURITIES 21,345 0
ACCOUNTS RECEIVABLE 665,184 533,772
SALES AND INCOME TAXES RECEIVABLE 89,000 24,924
INVENTORIES 575,016 400,895
PREPAID EXPENSES AND OTHER 139,305 98,156
DEFERRED TAX ASSETS - CURRENT 117,853 96,595
TOTAL CURRENT ASSETS 1,910,597 1,493,464
PROPERTY, PLANT AND EQUIPMENT - NET 1,057,782 787,201
OTHER ASSETS
INTANGIBLE ASSETS - NET 3,907,957 2,524,976
INVESTMENTS 17,668 23,531
OTHER ASSETS 194,329 93,588
SALES AND INCOME TAXES RECEIVABLE 1,042 913
DEFERRED TAX ASSETS - NON-CURRENT 67,891 45,205
TOTAL OTHER ASSETS 4,188,887 2,688,213
TOTAL 7,157,266 4,968,878
CURRENT LIABILITIES:
BANK OVERDRAFTS 455,588 168,358
CURRENT PORTION OF LONG-TERM DEBT 792,617 359,527
ACCOUNTS PAYABLE 423,432 349,598
ACCRUED EXPENSES AND OTHER 441,721 374,718
ACCRUAL FOR CUSTOMERS' RIGHT OF RETURN 26,557 17,881
INCOME TAXES PAYABLE 19,314 155,195
TOTAL CURRENT LIABILITIES 2,159,229 1,425,277
LONG-TERM LIABILITIES:
LONG-TERM DEBT 1,926,523 959,735
LIABILITY FOR TERMINATION INDEMNITIES 56,911 60,635
DEFERRED TAX LIABILITIES - NON-CURRENT 248,377 95,124
OTHER 229,972 181,888
TOTAL LONG-TERM LIABILITIES 2,461,782 1,297,381
COMMITMENTS AND CONTINGENCIES:
MINORITY INTERESTS IN
CONSOLIDATED SUBSIDIARIES 41,097 30,371
SHAREHOLDERS' EQUITY:
462,623,620 ORDINARY SHARES AUTHORIZED AND ISSUED -
456,188,834 SHARES OUTSTANDING 27,757 27,613
NET INCOME 492,204 424,286
RETAINED EARNINGS 1,975,196 1,763,950
TOTAL SHAREHOLDERS' EQUITY 2,495,158 2,215,849
TOTAL 7,157,266 4,968,878
Note:
LUXOTTICA GROUP
AS OF DECEMBER 31, 2007 AND DECEMBER 31, 2006
CONSOLIDATED BALANCE SHEET
(1) Certain amounts of 2006 have been reclassified to conform to 2007 presentation
Luxottica Group 4Q07, Table 5 of 7
In thousands of Euro Manufacturing
and
Wholesale
Retail Oakley (2)
Inter-Segment
Transactions and
Corporate Adj. (3)
Consolidated
2007
Net Sales 1,992,740 3,233,802 86,964 (347,452) 4,966,054
Operating Income 527,991 361,809 3,717 (60,204) 833,313
% of sales 26.5% 11.2% 4.3% 17.3% 16.8%
Capital Expenditures 112,973 213,292 8,503 334,769
Depreciation & Amortization 68,981 118,100 7,682 38,050 232,813
Assets 2,321,204 1,425,950 1,937,292 1,472,820 7,157,266
2006 (1)
Net Sales 1,715,369 3,294,160 0 (333,374) 4,676,156
Operating Income 445,843 431,546 0 (121,403) 755,987
% of sales 26.0% 13.1% #DIV/0! 36.4% 16.2%
Capital Expenditures 108,117 164,063 0 272,180
Depreciation & Amortization 57,331 122,403 0 41,063 220,797
Assets 1,853,144 1,343,481 0 1,772,252 4,968,878
2006 As adjusted (4)
Net Sales 1,715,369 3,294,160 76,557 (336,444) 4,749,642
Operating income 445,843 431,546 192 (123,897) 753,685
% of sales 26.0% 13.1% 0.3% 36.8% 15.9%
Depreciation & Amortization 57,331 122,403 8,494 41,063 229,291
Notes :
(1) Results of Things Remembered, Inc., a former subsidiary that was sold in September 2006, are classified as discontinued
operations and are not included in results of operations of 2006.
(4) These consolidated adjusted amounts are a non-GAAP measurement. The company has included this measurement to give comparative information for the two periods
discussed, aligning the consolidation periods of Oakley for both years 2006 and 2007. They reflect the consolidation of Oakley results for the last six weeks of 2006 (as it is in
2007) and same trademark amortization as in 2007. This information does not purport to be indicative of the actual result that would have been achieved had the Oakley
acquisition been completed as of November 14, 2006.
(3) It includes a non-recurring gain related to the sale of a real estate property in May 2007. The impact of the sales was a gain of approx. € 20 million before taxes or approx.
€ 13 million after taxes, equivalent to € 0.02 at EPS level.
- SEGMENTAL INFORMATION -
DECEMBER 31, 2007 AND DECEMBER 31, 2006
(2) It includes Oakley results of operation for the six weeks period from acquisition date (Nov. 14, 2007), one-off charges and relevant trademark amortization
LUXOTTICA GROUP
CONSOLIDATED FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED
Luxottica Group 4Q07, Table 6 of 7
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2007
In thousands of Euro (1) US GAAP IAS / IFRS
2007 IFRS 2 IFRS 3 IAS 12 IAS 19 IAS 38 IAS 39 FIN 48 Total 2007
Stock option
Business
combination Income Taxes
Employee
benefit
Intangible
Depreciation Derivatives Derecognition
Adjustments
IAS/IFRS
NET SALES 4,966,054 4,966,054
COST OF SALES (1,575,618) (2,046) (2,046) (1,577,664)
GROSS PROFIT 3,390,436 (2,046) (2,046) 3,388,390
OPERATING EXPENSES:
SELLING EXPENSES (1,591,438) (1,230) (1,230) (1,592,668)
ROYALTIES (129,644) (129,644)
ADVERTISING EXPENSES (348,198) (1,157) (1,157) (349,355)
GENERAL AND ADMINISTRATIVE EXPENSES (423,878) (4,381) (192) 8,957 4,384 (419,494)
TRADEMARK AMORTIZATION (63,965) (63,965)
TOTAL (2,557,123) (4,381) (1,422) 8,957 (1,157) 1,997 (2,555,126)
OPERATING INCOME 833,313 (4,381) (3,468) 8,957 (1,157) (48) 833,264
OTHER INCOME (EXPENSE):
INTEREST EXPENSES (89,498) (2,849) 609 (2,239) (91,738)
INTEREST INCOME 17,087 17,087
OTHER - NET 19,780 (1,074) (178) (1,252) 18,529
OTHER INCOME (EXPENSES)-NET (52,631) (3,923) 432 (3,491) (56,123)
INCOME BEFORE PROVISION FOR
INCOME TAXES 780,681 (4,381) (7,391) 8,957 (1,157) 432 (3,539) 777,142
PROVISION FOR INCOME TAXES (273,501) (2,258) 1,354 5,760 (2,465) 451 (226) (8,060) (5,442) (278,943)
INCOME BEFORE MINORITY INTEREST IN
INCOME OF CONSOLIDATED SUBSIDIARIES 507,180 (6,638) (6,036) 5,760 6,493 (706) 206 (8,060) (8,982) 498,199
MINORITY INTEREST IN INCOME
OF CONSOLIDATED SUBSIDIARIES (14,976) 6,628 6,628 (8,349)
NET INCOME 492,204 (6,638) 591 5,760 6,493 (706) 206 (8,060) (2,354) 489,850
BASIC EARNINGS PER SHARE (ADS) (1) 1.08 1.08
FULLY DILUTED EARNINGS PER SHARE (ADS) (1) 1.07 1.07
WEIGHTED AVERAGE NUMBER OF
OUTSTANDING SHARES 455,184,797 455,184,797
FULLY DILUTED AVERAGE NUMBER OF SHARES 458,530,609 458,297,325
Notes :
(1) Except earnings per share (ADS), which are expressed in Euro
COMMUNICATION DME/5015175 DATED MARCH 10, 2005
LUXOTTICA GROUP
RECONCILIATION OF THE CONSOLIDATED INCOME STATEMENT
PREPARED IN ACCORDANCE WITH US GAAP AND IAS / IFRS FOR THE YEAR ENDED DECEMBER 31, 2007,
PURSUANT TO CONSOB REGULATION N. 27021 OF APRIL 7, 2000 AND IN ACCORDANCE WITH CONSOB
Luxottica Group 4Q07, Table 7 of 10
NON-GAAP MEASURE:
NET DEBT TO PRO FORMA EBITDA RATIO FOR FY 2007
- Pro forma EBITDA does 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 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 December 31, 2007 to long-term debt as of
December 31, 2007, which is the most directly comparable U.S. GAAP financial measure, (2) a reconciliation of EBITDA and
pro forma EBITDA for FY 2007 to income from operations for 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.
- Pro forma 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.
- Pro forma 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.
- Pro forma EBITDA does not reflect cash expenditures or future requirements for capital expenditures or contractual
commitments.
- Pro forma EBITDA does not reflect changes in, or cash requirements for, working capital needs.
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 ratio also allows management to assess the cost of existing debt since it affects
the interest rates charged by the Company’s lenders.
Management believes that the net debt to pro forma EBITDA ratio for fiscal year 2007 is useful to investors because it
allows investors to assess the impact of cash flows on the Company’s level of leverage. 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
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 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 pro forma EBITDA and the ratio of net
debt to pro forma EBITDA as evaluative tools may have certain limitations, including the following:
- Pro forma 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.
- 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.
Luxottica Group 4Q07, Table 8 of 10
Dec. 31, 2007
Long-term debt 1,926.5
(+)
Current portion of long-term debt 792.6
(+)
Bank overdrafts 455.6
(+)
Cash (302.9)
(-)
Net debt 2,871.8
(=)
NON-U.S.GAAP MEASURE: NET DEBT
Luxottica Group 4Q07, Table 9 of 10
Millions of Euro
Luxottica
Group
Oakley Inc. from January 1,
2007 to Acquisiton Date Proforma
(+) (+) (=)
Income from operations 833.3 44.8 878.1
(+)
Depreciation & amortization 232.8 55.4 288.2
(+)
EBITDA 1,066.1 100.2 1,166.3
(=)
Net debt / EBITDA 2.5x
Note:
Dec. 31, 2007
Income from operations and, as a result, depreciation and amortization figures reflect the
impact of the amortization of the Oakley trademark as of January 1, 2007, as if Luxottica
Group had acquired that business as of that date.
Non-U.S. GAAP Measure:
proforma EBITDA and ratio of net debt to proforma EBITDA
Luxottica Group 4Q07, Table 10 of 10