UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 6-K

 

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

 

July 26, 2013

 

COMMISSION FILE NO. 1 - 10421

 

LUXOTTICA GROUP S.p.A.

 

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

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F x Form 40-F o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

 

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes o No x

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-

 

 

 



 

 

Set forth below is the text of a press release issued on July 25, 2013

 

Press release

 

Luxottica: Group’s solid growth is confirmed by record quarterly results

 

Net sales in the second quarter of 2013 exceeded Euro 2 billion (+9.4% at constant exchange rates2)

Operating margin is a record 18.4%3,5

 

Milan (Italy), July 25, 2013 — The Board of Directors of Luxottica Group S.p.A. (MTA: LUX; NYSE: LUX), a leader in the design, manufacture, distribution and sale of fashion, luxury and sports eyewear, met today and approved the consolidated results for the second quarter and the six months ended June 30, 2013 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IAS/IFRS).

 

Second quarter of 20131

 

(in millions of Euro)

 

2Q 2013

 

2Q 2012

 

Change

 

 

 

 

 

 

 

Net sales

 

2,018

 

1,882

 

+7.2%

  (+9.4% at constant exchange rates2)

 

 

 

 

 

 

 

 

Wholesale Division

 

880

 

788

 

+11.6%

  (+13.9% at constant exchange rates2)

 

 

 

 

 

 

 

 

Retail Division

 

1,138

 

1,094

 

+4.0%

  (+6.3% at constant exchange rates2)

 

 

 

 

 

 

 

 

Operating income

 

362

 

330

 

+9.7%

 

 

 

 

 

 

 

 

 

Adjusted 3,5

 

371

 

330

 

+12.4%

 

 

 

 

 

 

 

 

 

Net income attributable to Luxottica Group stockholders

 

212

 

194

 

+9.4%

 

 

 

 

 

 

 

 

 

Adjusted 3,5

 

218

 

194

 

+12.5%

 

 

 

 

 

 

 

 

 

Earnings per share

 

0.45

 

0.42

 

+7.6%

 

Adjusted 3,5

 

0.46

 

0.42

 

+10.6%

 

 

 

 

 

 

 

 

 

Earnings per share in US$

 

0.59

 

0.53

 

+9.6%

 

Adjusted 3,5

 

0.60

 

0.53

 

+12.7%

 

 

First half of 20131

 

(in millions of Euro)

 

1H 2013

 

1H 2012

 

Change

 

 

 

 

 

 

 

Net sales

 

3,882

 

3,670

 

+5.8%

  (+7.6% at constant exchange rates2)

 

 

 

 

 

 

 

 

Wholesale Division

 

1,661

 

1,515

 

+9.6%

  (+11.7% at constant exchange rates2)

 

 

 

 

 

 

 

 

Retail Division

 

2,221

 

2,155

 

+3.0%

  (+4.7% at constant exchange rates2)

 

 

 

 

 

 

 

 

Operating income

 

636

 

563

 

+13.0%

 

Adjusted 3,5,6

 

645

 

585

 

+10.4%

 

 

 

 

 

 

 

 

 

Net income attributable to Luxottica Group stockholders

 

371

 

323

 

+15.0%

 

Adjusted 3,5,6

 

377

 

338

 

+11.7%

 

 

 

 

 

 

 

 

 

Earnings per share

 

0.79

 

0.70

 

+13.2%

 

Adjusted 3,5,6

 

0.80

 

0.73

 

+9.8%

 

 

 

 

 

 

 

 

 

Earnings per share in US$

 

1.03

 

0.90

 

+14.6%

 

Adjusted 3,5,6

 

1.05

 

0.95

 

+11.2%

 

 

1



 

Operating performance for the second quarter and the first half of 2013

 

Luxottica’s solid growth continued throughout the first half of 2013 with a new record for net sales, which exceeded Euro 2 billion in the second quarter of the year, increasing from Euro 1,882 million in the second quarter of 2012 to Euro 2,018 million (+9.4% at constant exchange rates2). Profitability increased and the adjusted operating margin3 reached 18.4%5 the highest ever in Luxottica’s history. During the first six months of 2013, net sales reached Euro 3,882 million (+7.6% at constant exchange rates2).

 

“We are proud to announce a record second quarter and we once again achieved excellent results, exceeding the goal of Euro 2 billion in net sales and achieving a record 18.4%3,5 in operating margin. The generation of Euro 200 million in free cash flow3 is a further improvement on the exceptional results reported in 2012. This year, we have arrived at the half-way point very satisfied. Our team is working with determination and passion and we are happy with the excellent quarterly results which are also due to our vertically integrated and geographically diversified business model.” commented Andrea Guerra, Luxottica’s Chief Executive Officer.

 

In the second quarter of 2013, Luxottica achieved positive results in all of the primary geographic markets in which we are present. In recent months, all of our divisions contributed substantially to these record results. In particular, Europe performed very well in the quarter: Mediterranean markets returned to providing a positive performance and yielding excellent growth (+11% at constant exchange rates2,7), and markets in Continental Europe also achieved double-digit growth (+14.8% at constant exchange rates2,7).  We reported double-digit growth in emerging markets (+22.3% at constant exchange rates2,7) in both the Wholesale Division (+23.2% at constant exchange rates2,7) and the Retail Division (+19.7% at constant exchange rates2,7). Brazil, China, India and South-East Asia reported the strongest results during the quarter, confirming solid and consistent progress. North America achieved an increase in net sales in Dollars of 5.0%2,7, reporting an especially robust performance in the Wholesale Division (+8.4%2,7 ).

 

During the quarter, our brands continued their upward trend of strong and healthy development. In particular, Ray-Ban and Oakley yielded excellent performance, confirming their positive dynamic trend and organic growth as well as the effectiveness of new marketing initiatives in the period. The premium and luxury segment of our portfolio performed robustly and sales of the Armani collections fully met our expectations for the period.

 

The Retail Division’s performance was positive in all geographic areas. Sunglass Hut once more yielded excellent results, with an increase in comparable store sales4 of +7.3% during the quarter and in net sales of +8.9%. In particular, we are excited to announce the July 4, 2013 opening of the new Sunglass Hut flagship store in Times Square (New York City), in the heart of one of the mega-cities in which we operate, which immediately set a store sales record over a 1-day period and aims to be the first store with eight-digit sales.

 

These excellent results confirm that we enjoy a strong and robust business profile in a market with excellent growth prospects and we are confident that we have a solid foundation to reach our goals for 2013.

 

Adjusted operating income3 for the second quarter of 2013 amounted to Euro 3715 million (Euro 330 million during the same period of the previous year, +12.4%5). The Group’s operating margin grew further, rising from 17.5% in the second quarter of 2012 to an adjusted 18.4%5 in the comparable quarter of 2013.

 

During the first six months of the year, adjusted operating income3 amounted to Euro 6455 million, up by 10.4%5,6 compared to Euro 5856 million in the same period of 2012. The Group’s adjusted operating margin3,5 rose from 15.9%6 during this period in 2012 to 16.6%5 in the first half of 2013.

 

2



 

Adjusted net income3 for the second quarter of 2013 increased to Euro 2185 million (Euro 194 million in the second quarter of 2012, +12.5%5), resulting in adjusted EPS3 (earnings per share) of Euro 0.465 (at an average €/US$ exchange rate of 1.3058). Adjusted EPS3 in U.S. dollars was US$ 0.605 in the period.

 

In the second quarter of 2013, the strict control of working capital enabled Luxottica to generate positive free cash flow3 in the amount of Euro 200 million compared to Euro 180 million in the second quarter of 2012. After paying dividends of Euro 274 million during the quarter, net debt3 as of June 30, 2013 was Euro 1,886 million (Euro 1,662 million at the end of 2012), with a ratio of net debt to adjusted EBITDA3,5 of 1.3x, in line with the previous quarter.

 

Wholesale Division

 

Sales performance for the Wholesale Division saw markedly positive results in Luxottica’s primary geographic areas, with double-digit growth in both the second quarter and the first six months of 2013. Emerging markets, North America and South East Asia were the geographic areas that yielded the strongest performance, along with Continental and Mediterranean Europe.

 

The ongoing success of Oakley and Ray-Ban in all markets; strong results in the premium segment; stellar performance from the recently formed Atelier Division; the successful launch of the Armani collections; along with the Wholesale Division’s consistent ability to promote each brand’s distinctive traits drove Luxottica’s excellent results in the second quarter and the first half of 2013 in terms of both net sales and profitability.

 

Specifically, total net sales for the Wholesale Division rose to Euro 880 million (+13.9% at constant exchange rates2) during the quarter and to Euro 1,661 million (+11.7% at constant exchange rates2) in the first half of the year.

 

The Wholesale Division’s adjusted operating income3 amounted to Euro 2425 million in the quarter, yielding an increase of 16.5%5 compared to Euro 208 million in the second quarter of 2012. The Wholesale Divisions adjusted operating margin3 increased to 27.5%5 from 26.4% in the same period of 2012.

 

The Wholesale Division’s adjusted operating income3 was Euro 4305 million in the first half of the year, yielding an increase of 13.1%5 compared to Euro 381 million in the first half of 2012. The Wholesale Division’s adjusted operating margin3 increased to 25.9%5 from 25.1% in the same period of 2012.

 

Retail Division

 

Net sales for the Retail Division rose to Euro 1,138 million in the second quarter of 2013 from Euro 1,094 million in the second quarter of 2012 (+4.0% at current exchange rates and +6.3% at constant exchange rates2).

 

Net sales for the Retail Division rose to Euro 2,221 million in the first half of 2013 from Euro 2,155 million in the first half of 2012 (+3.0% at current exchange rates and +4.7% at constant exchange rates2).

 

The Retail Division’s operating income for the quarter rose to Euro 180 million, with an increase of 6.0% compared to Euro 169 million of the same period of 2012. Operating margin increased from 15.5% in the second quarter of 2012 to 15.8% in the second quarter of 2013.

 

The Retail Division’s adjusted operating income3 for the first half of the year rose to Euro 312 million, with an increase of 6.1%6 compared to Euro 2946 million in the first half of 2012. The Retail Division’s adjusted operating margin3 increased from 13.6%6 in the first half of 2012 to 14.0% in the first half of 2013.

 

Comparable store sales4 in the Retail Division’s optical segment were positive with especially strong results coming from the Asia Pacific region, and excellent performance was achieved in China and in Australia where comparable store sales4 of the Group’s specialized OPSM chain grew by +7.2%.

 

3



 

LensCrafters in North America achieved positive growth although not fully meeting expectations (comparable store sales4 were up +1.3% in the second quarter of 2013 and up +2.5% in the first half of 2013).

 

Sunglass Hut, the Group’s sun specialty chain, contributed significantly to the Retail Division’s second quarter 2013 results by virtue of the successful execution of initiatives launched during the period, continued global expansion and the ability to consistently attract new consumers and involve them in the brand experience. As a result of this success, Sunglass Hut globally increased comparable store sales4 by +7.3%,, driven by excellent double digit performance in South Africa and Brazil and robust growth in the North American (+6.5%), Australia and New Zealand (+9.0%) regions.

 

§

 

The Board of Directors of Luxottica Group S.p.A. has approved a notes offering within the next 12 months equivalent to a maximum of Euro 500 million as part of the “Euro Medium Term Note Programme” which was previously authorized and announced by Group. The offer of the notes is addressed to institutional investors in certain jurisdictions excluding North America (The United States and Canada), Japan and Australia.

 

 §

 

The results for the second quarter and first six months of 2013 will be discussed today at 6:30 p.m. (CET) during a conference call with the financial community. The audio portion and related presentation will be publicly available via live webcast on our website, 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.

 

§

 

 

Luxottica Group — Contacts

Cristina Parenti

Group Corporate Communication and Public Relations Director

Tel.: +39 (02) 8633 4683

E-mail: cristina.parenti@luxottica.com

 

Alessandra Senici

Group Investor Relations Director

Tel.: +39 (02) 8633 4870

E-mail: InvestorRelations@Luxottica.com

 

Ana Iris Reece

Group Financial and Corporate Press Office Manager

Tel.: +39 (02) 8633 4912

E-mail: anairis.reece@luxottica.com

 

www.luxottica.com

 


Notes on the press release

 

(1) All comparisons, including percentage changes, are between the three-month and the six-month periods ended June 30, 2013 and June 30, 2012. As of January 1, 2013, the Group adopted the revised IAS 19 - Employee Benefits standard. Group information for prior periods has been restated in compliance with the requirements of the revised standards. As a result, the Group’s second quarter 2012 operating income and net income decreased by Euro 3.0 million and Euro 1.8 million, respectively. The Group’s first half 2012 operating income and net income decreased by Euro 5.9 million and Euro 3.6 million, respectively.

(2) Figures given at constant exchange rates have been calculated using the average exchange rates of the respective comparative period in the previous year. For further information, please see the attached tables.

 

4



 

(3) EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted operating income/profit, adjusted operating margin, free cash flow, net debt, ratio of net debt to adjusted EBITDA, adjusted net income and adjusted EPS 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.

(5) The adjusted data for the first half and second quarter of 2013 does not include non-recurring costs relating to the reorganization of Alain Mikli International amounting to an approximately Euro 9.0 million adjustment to operating income (approximately Euro 6 million on an after-tax basis).

(6) The adjusted data for the first half and first quarter of 2012 does not include  non-recurring costs relating to the reorganization of the Australian retail business amounting to an approximately Euro 21 million adjustment to operating income and an approximately Euro 15 million adjustment to net income. The adjusted data as of December 31, 2012 does not include  non-recurring costs relating to the reorganization of the Australian retail business amounting to an approximately Euro 22 million adjustment to operating income and an approximately Euro 15 million adjustment to net income and a non-recurring accrual relating to Luxottica S.r.l. open tax audits for the 2007 tax year in the amount of Euro 10 million.

(7) Sales performance of Luxottica Group in the second quarter of 2013 at current exchange rates was approximately +11% in Mediterranean markets, +13.7% in Continental Europe, +19.3% in emerging markets and +19.8% for the Wholesale Division and 17.9% for the Retail Division in emerging markets. At current exchange rates, North America achieved an increase in net sales in USD of 5.0% and 8.2% in the Wholesale Division.

 

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. Owned brands include Ray-Ban, the world’s most famous sun eyewear brand, Oakley, Vogue Eyewear, Persol, Oliver Peoples, Alain Mikli, Arnette and REVO, while licensed brands include Giorgio Armani, Bulgari, Burberry, Chanel, Coach, Dolce & Gabbana, Donna Karan, Polo Ralph Lauren, Prada, Starck Eyes, 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, one plant in Brazil and one plant in the United States devoted to the production of sports eyewear. In 2012, Luxottica Group posted net sales of more than Euro 7.0 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 network, the ability to achieve and manage growth, the ability to negotiate and maintain favorable 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 we do not assume any obligation to update them.

 

- APPENDIX FOLLOWS -

 

5


 


 

LUXOTTICA GROUP

 

CONSOLIDATED FINANCIAL HIGHLIGHTS

FOR THE THREE-MONTH PERIODS ENDED

JUNE 30, 2013 AND JUNE 30, 2012

 

In accordance with IAS/IFRS

 

KEY FIGURES IN THOUSANDS OF EURO  (1)

 

2013

 

2012 (2)

 

% Change

 

 

 

 

 

 

 

 

 

NET SALES

 

2,017,608

 

1,882,185

 

7.2

%

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO LUXOTTICA GROUP STOCKHOLDERS

 

211,963

 

193,716

 

9.4

%

 

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE (ADS)(3):

 

0.45

 

0.42

 

7.6

%

 

KEY FIGURES IN THOUSANDS OF U.S. DOLLARS (1) (4)

 

2013

 

2012 (2)

 

% Change

 

 

 

 

 

 

 

 

 

NET SALES

 

2,634,593

 

2,411,832

 

9.2

%

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO LUXOTTICA GROUP STOCKHOLDERS

 

276,781

 

248,228

 

11.5

%

 

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE (ADS) (3):

 

0.59

 

0.53

 

9.6

%

 


 

 

2013

 

2012

 

 

 

Notes :

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

(2)  As of January 1, 2013, the Group adopted the revised IAS 19 Employee Benefits standard. Group information for prior periods has been restated in compliance with the requirements of the revised standard. As a result, the Group’s operating income and net income decreased by Euro 3.0 million and Euro 1.8 million, respectively, for the three-month period ended June 30, 2012.

 

 

 

 

 

 

 

(3)  Weighted average number of outstanding shares.

 

472,107,228

 

464,240,741

 

 

 

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

 

1.3058

 

1.2814

 

 

 

 

6



 

LUXOTTICA GROUP

 

CONSOLIDATED FINANCIAL HIGHLIGHTS

FOR THE SIX-MONTH PERIODS ENDED

JUNE 30, 2013 AND JUNE 30, 2012

 

In accordance with IAS/IFRS

 

KEY FIGURES IN THOUSANDS OF EURO (1)

 

2013

 

2012 (2)

 

% Change

 

 

 

 

 

 

 

 

 

NET SALES

 

3,881,728

 

3,670,358

 

5.8

%

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO LUXOTTICA GROUP STOCKHOLDERS

 

371,197

 

322,692

 

15.0

%

 

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE (ADS) (3)

 

0.79

 

0.70

 

13.2

%

 

KEY FIGURES IN THOUSANDS OF U.S. DOLLARS (1) (4)

 

2013

 

2012 (2)

 

% Change

 

 

 

 

 

 

 

 

 

NET SALES

 

5,096,321

 

4,758,619

 

7.1

%

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO LUXOTTICA GROUP STOCKHOLDERS

 

487,345

 

418,370

 

16.5

%

 

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE (ADS)(3)

 

1.03

 

0.90

 

14.6

%

 


 

 

2013

 

2012

 

 

 

Notes :

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

(2)  As of January 1, 2013, the Group adopted the revised IAS 19 Employee Benefits standard. Group information for prior periods has been restated in compliance with the requirements of the revised standard. As a result, the Group’s operating income and net income decreased by Euro 5.9 million and Euro 3.6 million, respectively, for the six-month period ended June 30, 2012.

 

 

 

 

 

 

 

(3)  Weighted average number of outstanding shares.

 

470,908,944

 

463,228,972

 

 

 

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

 

1.3129

 

1.2965

 

 

 

 

7



 

LUXOTTICA GROUP

 

CONSOLIDATED INCOME STATEMENT

FOR THE THREE-MONTH PERIODS ENDED

JUNE 30, 2013 AND JUNE 30, 2012

 

In accordance with IAS/IFRS

 

KEY FIGURES IN THOUSANDS OF EURO (1)

 

2013

 

% of sales

 

2012

 

% of sales

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

2,017,608

 

100.0

%

1,882,185

 

100.0

%

7.2

%

COST OF SALES

 

(647,681

)

 

 

(606,477

)

 

 

 

 

GROSS PROFIT

 

1,369,927

 

67.9

%

1,275,707

 

67.8

%

7.4

%

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

SELLING EXPENSES

 

(583,232

)

 

 

(562,847

)

 

 

 

 

ROYALTIES

 

(40,163

)

 

 

(35,586

)

 

 

 

 

ADVERTISING EXPENSES

 

(133,764

)

 

 

(123,429

)

 

 

 

 

GENERAL AND ADMINISTRATIVE EXPENSES

 

(251,094

)

 

 

(224,195

)

 

 

 

 

TOTAL

 

(1,008,253

)

 

 

(946,056

)

 

 

 

 

OPERATING INCOME

 

361,674

 

17.9

%

329,651

 

17.5

%

9.7

%

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSES

 

(26,284

)

 

 

(36,004

)

 

 

 

 

INTEREST INCOME

 

2,490

 

 

 

6,478

 

 

 

 

 

OTHER - NET

 

(4,285

)

 

 

(421

)

 

 

 

 

OTHER INCOME (EXPENSES)-NET

 

(28,080

)

 

 

(29,947

)

 

 

 

 

INCOME BEFORE PROVISION FOR INCOME TAXES

 

333,594

 

16.5

%

299,704

 

15.9

%

11.3

%

PROVISION FOR INCOME TAXES

 

(120,133

)

 

 

(104,743

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

213,461

 

 

 

194,961

 

 

 

 

 

OF WHICH ATTRIBUTABLE TO:

 

 

 

 

 

 

 

 

 

 

 

- LUXOTTICA GROUP STOCKHOLDERS

 

211,963

 

10.5

%

193,716

 

10.3

%

9.4

%

- NON-CONTROLLING INTERESTS

 

1,498

 

0.1

%

1,245

 

0.1

%

 

 

NET INCOME

 

213,461

 

10.6

%

194,961

 

10.4

%

9.5

%

 

 

 

 

 

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE (ADS):

 

0.45

 

 

 

0.42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FULLY DILUTED EARNINGS PER SHARE (ADS):

 

0.44

 

 

 

0.42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF OUTSTANDING SHARES

 

472,107,228

 

 

 

464,240,741

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FULLY DILUTED AVERAGE NUMBER OF SHARES

 

476,491,055

 

 

 

466,494,529

 

 

 

 

 

 


Notes :

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

 

8



 

LUXOTTICA GROUP

 

CONSOLIDATED INCOME STATEMENT

FOR THE SIX-MONTH PERIODS ENDED

JUNE 30, 2013 AND JUNE 30, 2012

 

In accordance with IAS/IFRS

 

KEY FIGURES IN THOUSANDS OF EURO (1)

 

2013

 

% of sales

 

2012

 

% of sales

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

3,881,728

 

100.0

%

3,670,358

 

100.0

%

5.8

%

COST OF SALES

 

(1,293,395

)

 

 

(1,229,042

)

 

 

 

 

GROSS PROFIT

 

2,588,333

 

66.7

%

2,441,316

 

66.5

%

6.0

%

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

SELLING EXPENSES

 

(1,145,917

)

 

 

(1,134,419

)

 

 

 

 

ROYALTIES

 

(76,333

)

 

 

(68,104

)

 

 

 

 

ADVERTISING EXPENSES

 

(245,318

)

 

 

(225,407

)

 

 

 

 

GENERAL AND ADMINISTRATIVE EXPENSES

 

(484,275

)

 

 

(450,139

)

 

 

 

 

TOTAL

 

(1,951,842

)

 

 

(1,878,069

)

 

 

 

 

OPERATING INCOME

 

636,491

 

16.4

%

563,247

 

15.3

%

13.0

%

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSES

 

(52,839

)

 

 

(72,988

)

 

 

 

 

INTEREST INCOME

 

5,037

 

 

 

11,895

 

 

 

 

 

OTHER - NET

 

(4,107

)

 

 

(489

)

 

 

 

 

OTHER INCOME (EXPENSES)-NET

 

(51,909

)

 

 

(61,582

)

 

 

 

 

INCOME BEFORE PROVISION FOR INCOME TAXES

 

584,582

 

15.1

%

501,665

 

13.7

%

16.5

%

PROVISION FOR INCOME TAXES

 

(210,499

)

 

 

(175,805

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

374,082

 

9.6

%

325,860

 

8.9

%

14.8

%

OF WHICH ATTRIBUTABLE TO:

 

 

 

 

 

 

 

 

 

 

 

- LUXOTTICA GROUP STOCKHOLDERS

 

371,197

 

9.6

%

322,692

 

8.8

%

15.0

%

- NON-CONTROLLING INTERESTS

 

2,885

 

0.0

%

3,168

 

0.1

%

 

 

NET INCOME

 

374,082

 

9.6

%

325,860

 

8.9

%

14.8

%

 

 

 

 

 

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE (ADS):

 

0.79

 

 

 

0.70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FULLY DILUTED EARNINGS PER SHARE (ADS):

 

0.78

 

 

 

0.69

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF OUTSTANDING SHARES

 

470,908,944

 

 

 

463,228,972

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FULLY DILUTED AVERAGE NUMBER OF SHARES

 

475,505,827

 

 

 

465,560,791

 

 

 

 

 

 


Notes :

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

 

9


 

 

 


 

LUXOTTICA GROUP

 

CONSOLIDATED BALANCE SHEET

AS OF JUNE 30, 2013 AND DECEMBER 31, 2012

 

In accordance with IAS/IFRS

 

KEY FIGURES IN THOUSANDS OF EURO 

 

June 30, 2013

 

December 31, 2012

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

CASH AND CASH EQUIVALENTS

 

373,378

 

790,093

 

ACCOUNTS RECEIVABLE - NET

 

962,703

 

698,755

 

INVENTORIES - NET

 

745,950

 

728,767

 

OTHER ASSETS

 

238,238

 

209,250

 

TOTAL CURRENT ASSETS

 

2,320,269

 

2,426,866

 

 

 

 

 

 

 

NON-CURRENT ASSETS:

 

 

 

 

 

PROPERTY, PLANT AND EQUIPMENT - NET

 

1,176,559

 

1,192,394

 

GOODWILL

 

3,187,390

 

3,148,770

 

INTANGIBLE ASSETS - NET

 

1,361,095

 

1,345,688

 

INVESTMENTS

 

55,982

 

11,745

 

OTHER ASSETS

 

154,566

 

147,036

 

DEFERRED TAX ASSETS

 

176,014

 

169,662

 

TOTAL NON-CURRENT ASSETS

 

6,111,605

 

6,015,294

 

 

 

 

 

 

 

TOTAL

 

8,431,874

 

8,442,160

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

BANK OVERDRAFTS

 

82,689

 

90,284

 

CURRENT PORTION OF LONG-TERM DEBT

 

115,030

 

310,072

 

ACCOUNTS PAYABLE

 

685,164

 

682,588

 

INCOME TAXES PAYABLE

 

93,268

 

66,350

 

SHORT-TERM PROVISIONS FOR RISKS AND OTHER CHARGES

 

88,965

 

66,032

 

OTHER LIABILITIES

 

594,217

 

589,658

 

TOTAL CURRENT LIABILITIES

 

1,659,332

 

1,804,984

 

 

 

 

 

 

 

NON-CURRENT LIABILITIES:

 

 

 

 

 

LONG-TERM DEBT

 

2,061,879

 

2,052,107

 

EMPLOYEE BENEFITS

 

118,851

 

191,710

 

DEFERRED TAX LIABILITIES

 

257,846

 

227,806

 

LONG-TERM PROVISIONS FOR RISKS AND OTHER CHARGES

 

116,066

 

119,612

 

OTHER LIABILITIES

 

60,200

 

52,702

 

TOTAL NON-CURRENT LIABILITIES

 

2,614,842

 

2,643,936

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

LUXOTTICA GROUP STOCKHOLDERS’ EQUITY

 

4,146,279

 

3,981,372

 

NON-CONTROLLING INTERESTS

 

11,422

 

11,868

 

TOTAL STOCKHOLDERS’ EQUITY

 

4,157,701

 

3,993,240

 

 

 

 

 

 

 

TOTAL

 

8,431,874

 

8,442,160

 

 

10



 

LUXOTTICA GROUP

 

CONSOLIDATED FINANCIAL HIGHLIGHTS

FOR THE SIX-MONTH PERIODS ENDED

JUNE 30, 2013 AND JUNE 30, 2012

- SEGMENTAL INFORMATION -

 

In accordance with IAS/IFRS

 

In thousands of Euro 

 

Manufacturing
and
Wholesale

 

Retail

 

Inter-Segment
Transactions and
Corporate Adj.

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

1,660,987

 

2,220,741

 

 

 

3,881,728

 

Operating Income

 

421,355

 

311,870

 

(96,734

)

636,491

 

% of Sales

 

25.4

%

14.0

%

 

 

16.4

%

Capital Expenditures

 

67,512

 

86,711

 

 

 

154,223

 

Depreciation and Amortization

 

53,171

 

86,619

 

42,778

 

182,568

 

 

 

 

 

 

 

 

 

 

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

1,514,999

 

2,155,359

 

 

 

3,670,358

 

Operating Income

 

380,642

 

272,619

 

(90,014

)

563,247

 

% of Sales

 

25.1

%

12.6

%

 

 

15.3

%

Capital Expenditures (1)

 

58,674

 

105,205

 

 

 

163,878

 

Depreciation and Amortization

 

47,599

 

80,424

 

42,625

 

170,647

 

 


Notes :

 

(1) In 2012, Capital Expenditures include Retail division finance leases of Euro 18.2 million. Capital Expenditures excluding finance leases were Euro 145.7 million.

 

11


 


 

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, operating income, operating margin, net income and earnings per share.

 

For comparative purposes, management has adjusted each of the foregoing measures by excluding non-recurring restructuring costs related to the Alain Mikli acquisition of approximately Euro 9.0 million as of June 30, 2013.

 

In addition, we have made adjustments to fiscal year 2012 measures for comparative purposes as described in the footnotes to the tables that contain such fiscal year 2012 data.

 

As of January 1, 2013, the Group adopted the revised IAS 19 Employee Benefits standard. Group information for prior periods has been restated in compliance with the requirements of the revised standard. As a result, 2012 Group’s operating income and net income decreased by Euro 5.9 million and Euro 3.6 million, respectively, for the six-month period ended June 30, 2012 and Euro 3.0 million and Euro 1.8 million, respectively, for the three-month period ended June 30, 2012.

 

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 measures 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 measures 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 measures, 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 pages immediately following the reconciliation of the adjusted measures.

 

12


 


 

Non-IAS/IFRS Measure: Reconciliation between reported and adjusted P&L items

Millions of Euro

 

Luxottica Group

 

 

 

6M13

 

6M12

 

 

 

Net sales

 

EBITDA

 

Operating Income

 

Net Income

 

EPS

 

Net sales

 

EBITDA

 

Operating Income

 

Net Income

 

EPS

 

Reported

 

3,881.7

 

819.1

 

636.5

 

371.2

 

0.79

 

3,670.4

 

733.9

 

563.2

 

322.7

 

0.70

 

> Adjustment for Mikli restructurring

 

 

 

9.0

 

9.0

 

5.9

 

0.01

 

 

 

 

 

 

 

 

 

 

 

> Adjustment for OPSM reorganization

 

 

 

 

 

 

 

 

 

 

 

 

 

21.4

 

21.4

 

15.0

 

0.03

 

Adjusted

 

3,881.7

 

828.1

 

645.5

 

377.1

 

0.80

 

3,670.4

 

755.3

 

584.7

 

337.7

 

0.73

 

 

Wholesale Division

 

 

 

6M13

 

6M12

 

 

 

Net sales

 

EBITDA

 

Operating Income

 

Net Income

 

EPS

 

Net sales

 

EBITDA

 

Operating Income

 

Net Income

 

EPS

 

Reported

 

1,661.0

 

474.5

 

421.4

 

n.a.

 

n.a.

 

1,515.0

 

428.2

 

380.6

 

n.a.

 

n.a.

 

> Adjustment for Mikli restructurring

 

 

 

9.0

 

9.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted

 

1,661.0

 

483.5

 

430.4

 

n.a.

 

n.a.

 

1,515.0

 

428.2

 

380.6

 

n.a.

 

n.a.

 

 

Retail Division

 

 

 

6M13

 

6M12

 

 

 

Net sales

 

EBITDA

 

Operating Income

 

Net Income

 

EPS

 

Net sales

 

EBITDA

 

Operating Income

 

Net Income

 

EPS

 

Reported

 

2,220.7

 

398.5

 

311.9

 

n.a.

 

n.a.

 

2,155.4

 

353.0

 

272.6

 

n.a.

 

n.a.

 

> Adjustment for OPSM reorganization

 

 

 

 

 

 

 

 

 

 

 

 

 

21.4

 

21.4

 

 

 

 

 

Adjusted

 

2,220.7

 

398.5

 

311.9

 

n.a.

 

n.a.

 

2,155.4

 

374.5

 

294.1

 

n.a.

 

n.a.

 

 

13



 

Non-IAS/IFRS Measure: Reconciliation between reported and adjusted P&L items

Millions of Euro

 

Luxottica Group

 

 

 

2Q13

 

2Q12

 

 

 

Net sales

 

EBITDA

 

Operating Income

 

Net Income

 

EPS

 

Net sales

 

EBITDA

 

Operating Income

 

Net Income

 

EPS

 

Reported

 

2,017.6

 

453.7

 

361.7

 

212.0

 

0.45

 

1,882.2

 

412.9

 

329.7

 

193.7

 

0.42

 

> Adjustment for OPSM reorganization

 

 

 

9.0

 

9.0

 

5.9

 

0.01

 

 

 

 

 

 

 

 

 

 

 

Adjusted

 

2,017.6

 

462.7

 

370.7

 

217.9

 

0.46

 

1,882.2

 

412.9

 

329.7

 

193.7

 

0.42

 

 

Wholesale Division

 

 

 

2Q13

 

2Q12

 

 

 

Net sales

 

EBITDA

 

Operating Income

 

Net Income

 

EPS

 

Net sales

 

EBITDA

 

Operating Income

 

Net Income

 

EPS

 

Reported

 

880.0

 

260.8

 

233.0

 

n.a.

 

n.a.

 

788.2

 

232.2

 

207.7

 

n.a.

 

n.a.

 

> Adjustment for Mikli restructurring

 

 

 

9.0

 

9.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted

 

880.0

 

269.8

 

242.0

 

n.a.

 

n.a.

 

788.2

 

232.2

 

207.7

 

n.a.

 

n.a.

 

 

14



 

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; and

·                  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 measures, 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.

 

15



 

Non-IAS/IFRS Measure: EBITDA and EBITDA margin

Millions of Euro

 

 

 

2Q 2012

 

2Q 2013

 

6M 2012

 

6M 2013

 

FY 2012

 

LTM June 30, 2013

 

Net income/(loss)

 

193.7

 

212.0

 

322.7

 

371.2

 

534.4

 

582.9

 

(+)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to non-controlling interest

 

1.2

 

1.5

 

3.2

 

2.9

 

4.2

 

3.9

 

(+)

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

104.7

 

120.1

 

175.8

 

210.5

 

305.9

 

340.6

 

(+)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (income)/expense

 

29.9

 

28.1

 

61.6

 

51.9

 

125.7

 

116.0

 

(+)

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

83.3

 

92.0

 

170.6

 

182.6

 

358.3

 

370.2

 

(+)

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

412.9

 

453.7

 

733.9

 

819.1

 

1,328.4

 

1,413.6

 

(=)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

1,882.2

 

2,017.6

 

3,670.4

 

3,881.7

 

7,086.1

 

7,297.4

 

(/)

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA margin

 

21.9

%

22.5

%

20.0

%

21.1

%

18.7

%

19.4

%

(=)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16



 

Non-IAS/IFRS Measure: Adjusted EBITDA and Adjusted EBITDA margin

Millions of Euro

 

 

 

2Q 2012

 

2Q 2013(1)

 

6M 2012(2)

 

6M 2013(1)

 

FY 2012(3)

 

LTM June 30, 2013 (1) (2) (3)

 

Adjusted net income/(loss)

 

193.7

 

217.9

 

337.7

 

377.1

 

559.6

 

599.0

 

(+)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to non-controlling interest

 

1.2

 

1.5

 

3.2

 

2.9

 

4.2

 

3.9

 

(+)

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted provision for income taxes

 

104.7

 

123.2

 

182.2

 

213.6

 

302.4

 

333.8

 

(+)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (income)/expense

 

29.9

 

28.1

 

61.6

 

51.9

 

125.7

 

116.0

 

(+)

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted depreciation and amortization

 

83.3

 

92.0

 

170.6

 

182.6

 

358.3

 

370.2

 

(+)

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

412.9

 

462.7

 

755.3

 

828.1

 

1,350.1

 

1,422.9

 

(=)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

1,882.2

 

2,017.6

 

3,670.4

 

3,881.7

 

7,086.1

 

7,297.4

 

(/)

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin

 

21.9

%

22.9

%

20.6

%

21.3

%

19.1

%

19.5

%

(=)

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The adjusted figures exclude the following:

(1)

non-recurring Mikli restructuring costs with an approximately Euro 9 million impact on operating income and an approximately Euro 6 million adjustment to net income.

(2)

non-recurring OPSM reorganization costs with an approximately Euro 21 million impact on operating income and an approximately Euro 15 million adjustment to net income.

(3)

(a) non-recurring OPSM reorganization costs with an approximately Euro 22 million impact on operating income and an approximately Euro 15 milion adjustment to net income; and

 

(b) non-recurring accrual for the tax audit relating to Luxottica S.r.l. (fiscal year 2007) of approximately Euro 10 million.

 

17



 

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 interests, 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 measures, 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 pages.

 

18



 

Non-IAS/IFRS Measure: Net debt and Net debt / EBITDA

Millions of Euro

 

 

 

Jun. 30, 2013

 

Dec. 31, 2012

 

Long-term debt (+)

 

2,061.9

 

2,052.1

 

Current portion of long-term debt (+)

 

115.0

 

310.1

 

Bank overdrafts (+)

 

82.7

 

90.3

 

Cash (-)

 

(373.4

)

(790.1

)

Net debt (=)

 

1,886.2

 

1,662.4

 

EBITDA (LTM and FY 2012)

 

1,413.6

 

1,328.4

 

Net debt/EBITDA

 

1.3x

 

1.3x

 

Net debt @ avg. exchange rates (1)

 

1,894.1

 

1,679.0

 

Net debt @ avg. exchange rates (1)/EBITDA

 

1.3x

 

1.3x

 

 


(1) Net debt figures are calculated using the average exchange rates used to calculate the EBITDA figures.

 

19



 

Non-IAS/IFRS Measure: Net debt and Net debt / Adjusted EBITDA

Millions of Euro

 

 

 

Jun. 30, 2013 (2)

 

Dec. 31, 2012 (3)

 

Long-term debt (+)

 

2,061.9

 

2,052.1

 

Current portion of long-term debt (+)

 

115.0

 

310.1

 

Bank overdrafts (+)

 

82.7

 

90.3

 

Cash (-)

 

(373.4

)

(790.1

)

Net debt (=)

 

1,886.2

 

1,662.4

 

Adjusted EBITDA (LTM and FY 2012)

 

1,422.9

 

1,350.1

 

Net debt/LTM Adjusted EBITDA

 

1.3x

 

1.2x

 

Net debt @ avg. exchange rates (1)

 

1,894.1

 

1,679.0

 

Net debt @ avg. exchange rates (1)/LTM EBITDA

 

1.3x

 

1.2x

 

 


(1)         Net debt figures are calculated using the average exchange rates used to calculate the EBITDA figures.

Adjusted figures exclude the following:

(2)         Non-recurring Mikli restructuring costs with an approximately Euro 9 million impact on operating income and an approximately Euro 6 million adjustment to net income.

(3)         (a) non-recurring OPSM reorganization costs with an approximately Euro 22 million impact on operating income and an approximately Euro 15 million adjustment to net income; and

(b) non-recurring accrual for the tax audit relating to Luxottica S.r.l. (fiscal year 2007) of approximately Euro 10 million.

 

20



 

Non-IAS/IFRS Measures: Free Cash Flow

 

Free cash flow represents net income before non-controlling interests, 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, for funding discretionary investments, for paying dividends or pursuing 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 measures, 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.

 

21



 

Non-IAS/IFRS Measure: Free cash flow

Millions of Euro

 

 

 

6M 2013

 

Adjusted EBITDA (1)

 

819

 

Δ working capital

 

(243

)

Capex

 

(154

)

 

 

 

 

Operating cash flow

 

422

 

Financial charges (2)

 

(48

)

Taxes

 

(167

)

Extraordinary charges (3)

 

(3

)

 

 

 

 

Free cash flow

 

204

 

 


(1)         EBITDA is not an IAS/IFRS measure; please see table on the earlier page for a reconciliation of adjusted EBITDA to EBITDA and EBITDA to net income

(2)         Equals interest income minus interest expense

(3)         Equals extraordinary income minus extraordinary expense

 

22



 

Non-IAS/IFRS Measure: Free cash flow

Millions of Euro

 

 

 

2Q 2013

 

Adjusted EBITDA (1)

 

454

 

Δ working capital

 

12

 

Capex

 

(85

)

 

 

 

 

Operating cash flow

 

381

 

Financial charges (2)

 

(24

)

Taxes

 

(153

)

Extraordinary charges (3)

 

(4

)

 

 

 

 

Free cash flow

 

200

 

 


(1)         EBITDA is not an IAS/IFRS measure; please see table on the earlier page for a reconciliation of adjusted EBITDA to EBITDA and EBITDA to net income

(2)         Equals interest income minus interest expense

(3)         Equals extraordinary income minus extraordinary expense

 

23



 

Major currencies

 

Average exchange rates

 

Three months ended

 

Six months ended

 

Twelve months ended

 

Three months ended

 

Six months ended

 

per € 1

 

June 30, 2013

 

June 30, 2013

 

December 31, 2012

 

June 30, 2012

 

June 30, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

US$

 

1.30583

 

1.31286

 

1.28479

 

1.28142

 

1.29647

 

 

 

 

 

 

 

 

 

 

 

 

 

AUD

 

1.31895

 

1.29503

 

1.24071

 

1.26990

 

1.25586

 

 

 

 

 

 

 

 

 

 

 

 

 

GBP

 

0.85048

 

0.85075

 

0.81087

 

0.80998

 

0.82252

 

 

 

 

 

 

 

 

 

 

 

 

 

CNY

 

8.03636

 

8.12587

 

8.10523

 

8.10715

 

8.19011

 

 

 

 

 

 

 

 

 

 

 

 

 

JPY

 

128.93703

 

125.38685

 

102.49188

 

102.59419

 

103.31024

 

 

24



 

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

 

 

 

LUXOTTICA GROUP S.p.A.

 

 

 

 

 

 

 

 

By:

/s/ ENRICO CAVATORTA

Date: July 26, 2013

 

 

ENRICO CAVATORTA
CHIEF FINANCIAL OFFICER

 

25