0

 

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 25, 2014

 

COMMISSION FILE NO. 1 - 10421

 

LUXOTTICA GROUP S.p.A.

 

VIA 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 24, 2014

 

Press release

 

Luxottica reports accelerated growth in the second quarter of 2014:

record operating income and free cash flow3

 

Net sales of Euro 2.1 billion (+7.0% at constant exchange rates2)

Operating margin of 19.2% and free cash flow3 of Euro 321 million:

an all-time quarterly record

 

Milan (Italy), July 24, 2014

 

Luxottica Group net sales

 

·                  accelerated growth in net sales for the second quarter: Euro 2,060 million (+7.0% at constant exchange rates2)

·                  net sales for the first half: Euro 3,902 million (+5.6% at constant exchange rates2)

·                  still unfavorable exchange rate environment

 

Wholesale Division

 

·                  net sales for the second quarter: Euro 935 million (+10.3% at constant exchange rates2)

·                  strong increase in sales in emerging markets: +20.8% at constant exchange rates2,6

·                  accelerating performance in North America compared to the first quarter: +9.9% in USD

·                  solid growth in Europe: +6.9% at constant exchange rates2,6

·                  Ray-Ban and Oakley continue to be major growth drivers

·                  the premium and luxury segment confirm a structural growth trend

 

Retail Division

 

·                  net sales for the second quarter: Euro 1,125 million (+4.3% at constant exchange rates2)

·                  faster comparable store sales4 growth in the second quarter: +3.8% in North America; double digit growth in emerging markets

·                  LensCrafters in North America delivered an increase in comparable store sales4 of +0.9%

·                  Sunglass Hut continued to deliver excellent results with global sales on a comparable store basis4 of +9.9%

 

Profitability and free cash flow3

 

·                  net income

·                  second quarter: Euro 235 million (+15.0%5 at constant exchange rates2)

·                  first half: Euro 393 million (+12.8%5 at constant exchange rates2)

·                  operating margin up by 80 bps5 to 19.2%: an all-time quarterly record (+110 bps5 at constant exchange rates2)

·                  net profit margin of 11.4% up by 60 bps5

·                  positive free cash flow3 of Euro 321 million, an all-time record on a quarterly basis

 

Start to the third quarter

 

·                  net sales growth remains robust, with both Divisions confirming strong demand

·                  impact from negative exchange rate environment is gradually declining due to a more favorable basis of comparison between the major currencies

 

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, 2014 in accordance with

 

1



 

International Financial Reporting Standards as issued by the International Accounting Standards Board (IAS/IFRS).

 

Second quarter of 2014 1

 

(in millions of Euro)

 

2Q 2014
at current
exchange

rates

 

2Q 2013
at current
exchange

rates

 

Change at
constant
exchange
rates
2

 

Change at
current
exchange
rates

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

2,060

 

2,018

 

+7.0

%

+2.1

%

Wholesale Division

 

935

 

880

 

+10.3

%

+6.2

%

Retail Division

 

1,125

 

1,138

 

+4.3

%

-1.1

%

Operating income

 

396

 

362

 

 

 

+9.5

%

Adjusted 3,5

 

396

 

371

 

 

 

+6.9

%

 

 

 

 

 

 

 

 

 

 

Net income attributable to Luxottica Group stockholders

 

235

 

212

 

 

 

+11.0

%

Adjusted 3,5

 

235

 

218

 

 

 

+8.0

%

Earnings per share

 

0.49

 

0.45

 

 

 

+10.2

%

Adjusted 3,5

 

0.49

 

0.46

 

 

 

+7.3

%

Earnings per share in US$

 

0.68

 

0.59

 

 

 

+15.8

%

Adjusted 3,5

 

0.68

 

0.60

 

 

 

+12.6

%

 

First half of 20141

 

(in millions of Euro)

 

1H 2014
at current

exchange
rates

 

1H 2013
at current

exchange
rates

 

Change at
constant
exchange
rates
2

 

Change at
current
exchange
rates

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

3,902

 

3,882

 

+5.6

%

+0.5

%

Wholesale Division

 

1,739

 

1,661

 

+9.2

%

+4.7

%

Retail Division

 

2,163

 

2,221

 

+3.0

%

-2.6

%

Operating income

 

666

 

636

 

 

 

+4.7

%

Adjusted 3,5

 

666

 

645

 

 

 

+3.2

%

Net income attributable to Luxottica Group stockholders

 

393

 

371

 

 

 

+5.8

%

Adjusted 3,5

 

393

 

377

 

 

 

+4.1

%

Earnings per share

 

0.83

 

0.79

 

 

 

+5.0

%

Adjusted 3,5

 

0.83

 

0.80

 

 

 

+3.3

%

Earnings per share in US$

 

1.13

 

1.03

 

 

 

+9.6

%

Adjusted 3,5

 

1.13

 

1.05

 

 

 

+7.8

%

 

2



 

Operating performance for the second quarter and the first half of 2014

 

Luxottica reported accelerated growth in net sales in the second quarter of 2014 along with record operating income and free cash flow3. These results are especially significant considering the continuation of an unfavorable exchange rate environment and the resulting negative impact on the Group’s performance reported at current exchange rates.

 

“We are particularly proud of the excellent results that we are achieving so far in 2014: we once again set record results for the second quarter thanks to well balanced and organic growth,” said Andrea Guerra, Chief Executive Officer at Luxottica. “The increase in profitability remains a priority for the Group, as we continue to pursue sustained net sales growth and the expansion of our business into new channels and markets.”

 

“Our free cash flow3 continues to improve, consolidating our ability to seize growth opportunities wherever they happen to be. The start to the third quarter confirms a solid and well balanced growth trend across all businesses and markets.”

 

“Looking ahead, we are entering the second half of the year with confidence and optimism. We laid the groundwork for even more robust growth due to the huge commitment and outstanding work from the entire Group since the start of the year. Moreover, we believe that the negative exchange rate effect will gradually decline thanks to a more favorable basis of comparison between the major currencies”.

 

Turning to the Group’s operating performance during the period, operating income for the second quarter of 2014 was Euro 396 million (+6.9% over the adjusted3,5 Euro 371 million operating income reported during the second quarter of 2013). The Group’s operating margin increased from adjusted3,5 18.4% in the second quarter of 2013 to 19.2% in the second quarter of 2014.

 

During the first six months of the year, operating income was Euro 666 million, an increase of 3.2% from the adjusted3,5 Euro 645 million reported in the first half of 2013. Operating margin rose from an adjusted3,5 16.6% in 2013 to 17.1% in the first half of 2014.

 

Net income for the second quarter of 2014 increased to Euro 235 million (+8.0% over the adjusted3,5 Euro 218 million reported during the second quarter of 2013), resulting in EPS (earnings per share) of Euro 0.49 (at an average €/US$ exchange rate of 1.3711). EPS in U.S. dollars was US$ 0.68.

 

In the second quarter of 2014, operating profitability and strict control over working capital enabled Luxottica to generate positive free cash flow3 in the amount of Euro 321 million compared to Euro 200 million in the second quarter of 2013. After paying dividends of Euro 308 million during the second quarter, net debt3 as of June 30, 2014 was Euro 1,429 million (Euro 1,461 million at the end of 2013), with a ratio of net debt to adjusted EBITDA3,5 of 1.0x, in line with the first quarter of the year.

 

Wholesale Division

 

The Wholesale Division delivered robust sales results in the major geographic areas in which it operates with double-digit growth in the second quarter of 2014 compared to the same quarter of 2013 (+10.3% at constant exchange rates2). In particular, emerging markets (China, Brazil, India and Turkey), North America and Continental Europe (Germany, France, the UK and the Nordics) were the geographic areas that delivered the strongest performance.

 

The ongoing success of Oakley and Ray-Ban in all markets, solid results in the premium and luxury segment and the Wholesale Division’s consistent ability to promote each brand’s distinctive traits drove Luxottica’s excellent results in the second quarter of 2014 in terms of both net sales and profitability.

 

Specifically, the Wholesale Division’s total net sales for the quarter increased to Euro 935 million (+10.3% at constant exchange rates2). The Wholesale Division’s total net sales for the first half of the year increased to Euro 1,739 million (+9.2% at constant exchange rates2).

 

3



 

In the second quarter the Wholesale Division’s operating income was Euro 262 million, an increase of 8.4% from an adjusted3,5 Euro 242 million in the second quarter of 2013. Operating margin increased to 28.1% from adjusted3,5 27.5% in the second quarter of 2013.

 

For the first half of the year, the Wholesale Division’s operating income amounted to Euro 456 million, an increase of 6.0% from an adjusted3,5 Euro 430 million in the first half of 2013. Operating margin increased to 26.2% in the first half of 2014 from adjusted3,5 25.9% in the same period of 2013.

 

Retail Division

 

Net sales for the Retail Division were Euro 1,125 million in the second quarter of 2014 compared to Euro 1,138 million in the second quarter of 2013 (+4.3% at constant exchange rates2; -1.1% at current exchange rates).

 

Net sales for the Retail Division were Euro 2,163 million in the first half of 2014 compared to Euro 2,221 million in the first half of 2013 (+3.0% at constant exchange rates2; -2.6% at current exchange rates).

 

The Retail Division’s operating income for the second quarter of 2014 rose to Euro 182 million, with an increase of 1.5% compared to Euro 180 million in the same period of 2013. Operating margin increased from 15.8% in the second quarter of 2013 to 16.2% in the second quarter of 2014.

 

The Retail Division’s operating income for the first half of the year was Euro 307 million, a decrease of 1.6% compared to Euro 312 million in the first half of 2013. The Retail Division’s operating margin increased from 14.0% in the first half of 2013 to 14.2% in the first half of 2014.

 

For the second quarter of 2014, comparable store sales4 in the Retail Division’s optical segment were positive, with excellent performance in China. In North America, LensCrafters reported an increase in comparable store sales4 of +0.9%, building on the trend that began in April when comparable store sales4 returned to be positive.

 

Sunglass Hut, the Group’s sun specialty chain, significantly contributed to the Retail Division’s results thanks to the successful execution of initiatives launched during the quarter, continued global expansion and the ability to consistently attract new consumers and engage them in the brand experience. As a result of this success, Sunglass Hut globally increased comparable store sales4 by +9.9%, driven by excellent results in Iberia, South Africa and Latin America and robust growth in North America.

 

§

 

The results for the second quarter and first six months of 2014 will be discussed today at 6:30PM (CET) during a conference call with the financial community. The presentation will be available via live webcast at www.luxottica.com.

 

§

 

The officer responsible for preparing the Company’s financial reports, Enrico Cavatorta, declares, pursuant to Article 154-bis, Section 2, 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.

 

4



 

Luxottica Group — Contacts

 

Cristina Parenti

Alessandra Senici

Group Corporate Communication and Public Relations Director

Group Investor Relations Director

Tel.: +39 (02) 8633 4683

Tel.: +39 (02) 8633 4870

Email: cristina.parenti@luxottica.com

Email: InvestorRelations@Luxottica.com

 

 

www.luxottica.com/it/company/media-center

www.luxottica.com/it/company/investors

 


Notes on the press release

 

(1) All comparisons, including percentage changes, are between the three-month and six-month periods ended June 30, 2014 and June 30, 2013, respectively.

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

(3) EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted operating income/profit, adjusted operating margin, free cash flow, net debt, net debt/adjusted EBITDA ratio, and adjusted EPS are not measures in accordance with IAS/IFRS. For further information on such non-IAS/IFRS measures, please refer to 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) Adjusted data for the second quarter and first half of 2013 exclude non-recurring costs relating to the integration of Alain Mikli International equivalent to a Euro 9.0 million adjustment to operating income (approximately Euro 6 million on an after-tax basis).

(6) At current exchange rates the Wholesale Division’s net sales in the second quarter of 2014 increased by 5.6% and by 11.1% in Europe and in emerging markets respectively.

 

Luxottica Group S.p.A.

 

Luxottica Group is a leader in premium, luxury and sports eyewear with over 7,000 optical and sun retail stores in North America, Asia-Pacific, China, South Africa, Latin America and Europe, and a strong, well-balanced brand portfolio. House brands include Ray-Ban, the world’s most famous sun eyewear brand, Oakley, Vogue Eyewear, Persol, Oliver Peoples, Alain Mikli and Arnette, while licensed brands include Giorgio Armani, Bulgari, Burberry, Chanel, Coach, Dolce & Gabbana, Donna Karan, Polo Ralph Lauren, Prada, Michael Kors, 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, three 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 2013, Luxottica Group posted net sales of more than Euro 7.3 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, 2014 AND JUNE 30, 2013

 

In accordance with IAS/IFRS

 

KEY FIGURES IN THOUSANDS OF EURO  (1)

 

2014

 

2013

 

% Change

 

 

 

 

 

 

 

 

 

NET SALES

 

2,059,979

 

2,017,608

 

2.1

%

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO LUXOTTICA GROUP STOCKHOLDERS

 

235,214

 

211,963

 

11.0

%

 

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE (ADS)(2):

 

0.49

 

0.45

 

10.2

%

 

 

 

 

 

 

 

 

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

 

2014

 

2013

 

% Change

 

 

 

 

 

 

 

 

 

NET SALES

 

2,824,437

 

2,634,593

 

7.2

%

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO LUXOTTICA GROUP STOCKHOLDERS

 

322,502

 

276,781

 

16.5

%

 

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE (ADS) (2):

 

0.68

 

0.59

 

15.8

%

 


 

 

2014

 

2013

 

 

Notes :

 

 

 

 

 

 

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

 

 

 

 

 

 

(2)  Weighted average number of outstanding shares.

 

475,221,228

 

472,107,228

 

 

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

 

1.3711

 

1.3058

 

 

 

6



 

LUXOTTICA GROUP

 

CONSOLIDATED FINANCIAL HIGHLIGHTS

FOR THE SIX-MONTH PERIODS ENDED

JUNE 30, 2014 AND JUNE 30, 2013

 

In accordance with IAS/IFRS

 

KEY FIGURES IN THOUSANDS OF EURO (1)  

 

2014

 

2013

 

% Change

 

 

 

 

 

 

 

 

 

NET SALES

 

3,902,313

 

3,881,728

 

0.5

%

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO LUXOTTICA GROUP STOCKHOLDERS

 

392,541

 

371,197

 

5.8

%

 

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE (ADS) (2)

 

0.83

 

0.79

 

5.0

%

 

 

 

 

 

 

 

 

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

 

2014

 

2013

 

% Change

 

 

 

 

 

 

 

 

 

NET SALES

 

5,347,340

 

5,096,321

 

4.9

%

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO LUXOTTICA GROUP STOCKHOLDERS

 

537,899

 

487,344

 

10.4

%

 

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE (ADS)(2)

 

1.13

 

1.03

 

9.6

%

 


 

 

2014

 

2013

 

 

Notes :

 

 

 

 

 

 

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

 

 

 

 

 

 

(2)  Weighted average number of outstanding shares.

 

474,464,497

 

470,908,944

 

 

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

 

1.3703

 

1.3129

 

 

 

7



 

LUXOTTICA GROUP

 

CONSOLIDATED INCOME STATEMENT

FOR THE THREE-MONTH PERIODS ENDED

JUNE 30, 2014 AND JUNE 30, 2013

 

In accordance with IAS/IFRS

 

KEY FIGURES IN THOUSANDS OF EURO (1) 

 

2014

 

% of sales

 

2013

 

% of sales

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

2,059,979

 

100.0

%

2,017,608

 

100.0

%

2.1

%

COST OF SALES

 

(685,672

)

 

 

(663,283

)

 

 

 

 

GROSS PROFIT

 

1,374,307

 

66.7

%

1,354,325

 

67.1

%

1.5

%

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

SELLING EXPENSES

 

(572,435

)

 

 

(582,500

)

 

 

 

 

ROYALTIES

 

(39,626

)

 

 

(40,163

)

 

 

 

 

ADVERTISING EXPENSES

 

(140,290

)

 

 

(133,764

)

 

 

 

 

GENERAL AND ADMINISTRATIVE EXPENSES

 

(225,823

)

 

 

(236,225

)

 

 

 

 

TOTAL

 

(978,175

)

 

 

(992,651

)

 

 

 

 

OPERATING INCOME

 

396,132

 

19.2

%

361,674

 

17.9

%

9.5

%

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

 

 

INTEREST INCOME

 

3,009

 

 

 

2,490

 

 

 

 

 

INTEREST EXPENSES

 

(27,289

)

 

 

(26,284

)

 

 

 

 

OTHER - NET

 

(1,698

)

 

 

(4,285

)

 

 

 

 

OTHER INCOME (EXPENSES)-NET

 

(25,978

)

 

 

(28,080

)

 

 

 

 

INCOME BEFORE PROVISION FOR INCOME TAXES

 

370,154

 

18.0

%

333,594

 

16.5

%

11.0

%

PROVISION FOR INCOME TAXES

 

(133,285

)

 

 

(120,133

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

236,869

 

 

 

213,461

 

 

 

 

 

OF WHICH ATTRIBUTABLE TO:

 

 

 

 

 

 

 

 

 

 

 

- LUXOTTICA GROUP STOCKHOLDERS

 

235,214

 

11.4

%

211,963

 

10.5

%

11.0

%

- NON-CONTROLLING INTERESTS

 

1,655

 

0.1

%

1,498

 

0.1

%

 

 

NET INCOME

 

236,869

 

11.5

%

213,461

 

10.6

%

11.0

%

 

 

 

 

 

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE (ADS):

 

0.49

 

 

 

0.45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FULLY DILUTED EARNINGS PER SHARE (ADS):

 

0.49

 

 

 

0.44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF OUTSTANDING SHARES

 

475,221,228

 

 

 

472,107,228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FULLY DILUTED AVERAGE NUMBER OF SHARES

 

478,436,606

 

 

 

476,491,055

 

 

 

 

 

 


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, 2014 AND JUNE 30, 2013

 

In accordance with IAS/IFRS

 

KEY FIGURES IN THOUSANDS OF EURO (1) 

 

2014

 

% of sales

 

2013

 

% of sales

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

3,902,313

 

100.0

%

3,881,728

 

100.0

%

0.5

%

COST OF SALES

 

(1,349,814

)

 

 

(1,323,878

)

 

 

 

 

GROSS PROFIT

 

2,552,499

 

65.4

%

2,557,849

 

65.9

%

-0.2

%

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

SELLING EXPENSES

 

(1,120,103

)

 

 

(1,144,519

)

 

 

 

 

ROYALTIES

 

(75,629

)

 

 

(76,333

)

 

 

 

 

ADVERTISING EXPENSES

 

(248,794

)

 

 

(245,318

)

 

 

 

 

GENERAL AND ADMINISTRATIVE EXPENSES

 

(441,627

)

 

 

(455,189

)

 

 

 

 

TOTAL

 

(1,886,153

)

 

 

(1,921,359

)

 

 

 

 

OPERATING INCOME

 

666,346

 

17.1

%

636,491

 

16.4

%

4.7

%

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

 

 

INTEREST INCOME

 

5,840

 

 

 

5,037

 

 

 

 

 

INTEREST EXPENSES

 

(53,318

)

 

 

(52,839

)

 

 

 

 

OTHER - NET

 

(353

)

 

 

(4,107

)

 

 

 

 

OTHER INCOME (EXPENSES)-NET

 

(47,832

)

 

 

(51,909

)

 

 

 

 

INCOME BEFORE PROVISION FOR INCOME TAXES

 

618,514

 

15.8

%

584,582

 

15.1

%

5.8

%

PROVISION FOR INCOME TAXES

 

(222,667

)

 

 

(210,499

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

395,847

 

10.2

%

374,081

 

9.6

%

5.8

%

OF WHICH ATTRIBUTABLE TO:

 

 

 

 

 

 

 

 

 

 

 

- LUXOTTICA GROUP STOCKHOLDERS

 

392,541

 

10.1

%

371,196

 

9.6

%

5.8

%

- NON-CONTROLLING INTERESTS

 

3,306

 

0.1

%

2,885

 

0.0

%

 

 

NET INCOME

 

395,847

 

10.2

%

374,081

 

9.6

%

5.8

%

 

 

 

 

 

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE (ADS):

 

0.83

 

 

 

0.79

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FULLY DILUTED EARNINGS PER SHARE (ADS):

 

0.82

 

 

 

0.78

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF OUTSTANDING SHARES

 

474,464,497

 

 

 

470,908,944

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FULLY DILUTED AVERAGE NUMBER OF SHARES

 

477,917,675

 

 

 

475,505,827

 

 

 

 

 

 


Notes :

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

 

9



 

LUXOTTICA GROUP

 

CONSOLIDATED BALANCE SHEET

AS OF JUNE 30, 2014 AND DECEMBER 31, 2013

 

In accordance with IAS/IFRS

 

KEY FIGURES IN THOUSANDS OF EURO 

 

June 30, 2014

 

December 31, 2013

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

CASH AND CASH EQUIVALENTS

 

1,183,200

 

617,995

 

ACCOUNTS RECEIVABLE - NET

 

943,895

 

680,296

 

INVENTORIES - NET

 

657,968

 

698,950

 

OTHER ASSETS

 

232,995

 

238,761

 

TOTAL CURRENT ASSETS

 

3,018,058

 

2,236,002

 

 

 

 

 

 

 

NON-CURRENT ASSETS:

 

 

 

 

 

PROPERTY, PLANT AND EQUIPMENT - NET

 

1,196,858

 

1,183,236

 

GOODWILL

 

3,107,312

 

3,045,216

 

INTANGIBLE ASSETS - NET

 

1,273,113

 

1,261,137

 

INVESTMENTS

 

58,032

 

58,108

 

OTHER ASSETS

 

116,979

 

126,583

 

DEFERRED TAX ASSETS

 

190,961

 

172,623

 

TOTAL NON-CURRENT ASSETS

 

5,943,256

 

5,846,903

 

 

 

 

 

 

 

TOTAL

 

8,961,313

 

8,082,905

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

BANK OVERDRAFTS

 

80,907

 

44,921

 

CURRENT PORTION OF LONG-TERM DEBT

 

303,966

 

318,100

 

ACCOUNTS PAYABLE

 

658,329

 

681,151

 

INCOME TAXES PAYABLE

 

95,433

 

9,477

 

SHORT-TERM PROVISIONS FOR RISKS AND OTHER CHARGES

 

140,278

 

123,688

 

OTHER LIABILITIES

 

559,354

 

523,050

 

TOTAL CURRENT LIABILITIES

 

1,838,267

 

1,700,386

 

 

 

 

 

 

 

NON-CURRENT LIABILITIES:

 

 

 

 

 

LONG-TERM DEBT

 

2,226,839

 

1,716,410

 

EMPLOYEE BENEFITS

 

103,387

 

76,399

 

DEFERRED TAX LIABILITIES

 

248,465

 

268,078

 

LONG-TERM PROVISIONS FOR RISKS AND OTHER CHARGES

 

106,461

 

97,544

 

OTHER LIABILITIES

 

76,525

 

74,151

 

TOTAL NON-CURRENT LIABILITIES

 

2,761,678

 

2,232,583

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

LUXOTTICA GROUP STOCKHOLDERS’ EQUITY

 

4,351,970

 

4,142,828

 

NON-CONTROLLING INTERESTS

 

9,399

 

7,107

 

TOTAL STOCKHOLDERS’ EQUITY

 

4,361,369

 

4,149,936

 

 

 

 

 

 

 

TOTAL

 

8,961,313

 

8,082,905

 

 

10



 

LUXOTTICA GROUP

 

CONSOLIDATED FINANCIAL HIGHLIGHTS

FOR THE SIX-MONTH PERIODS ENDED

JUNE 30, 2014 AND JUNE 30, 2013

- SEGMENTAL INFORMATION -

 

In accordance with IAS/IFRS

 

In thousands of Euro 

 

Manufacturing
and
Wholesale

 

Retail

 

Inter-Segment
Transactions and
Corporate Adj.

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

1,739,399

 

2,162,913

 

 

 

3,902,313

 

Operating Income

 

456,264

 

306,842

 

(96,760

)

666,346

 

% of Sales

 

26.2

%

14.2

%

 

 

17.1

%

Capital Expenditures

 

68,490

 

105,428

 

 

 

173,919

 

Depreciation and Amortization

 

57,313

 

85,716

 

38,653

 

181,681

 

 

 

 

 

 

 

 

 

 

 

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

 

 

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 made adjustments to fiscal year 2013 measures as described in the footnotes to the tables that contain such fiscal year 2013 data.

 

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 limitations 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

 

 

 

6M14

 

6M13

 

 

 

Net sales

 

EBITDA

 

Operating Income

 

Net Income

 

EPS

 

Net sales

 

EBITDA

 

Operating Income

 

Net Income

 

EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported

 

3,902.3

 

848.0

 

666.3

 

392.5

 

0.83

 

3,881.7

 

819.1

 

636.5

 

371.2

 

0.79

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

> Adjustment for Alain Mikli restructuring

 

 

 

 

 

 

 

 

 

 

 

 

 

9.0

 

9.0

 

5.9

 

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted

 

3,902.3

 

848.0

 

666.3

 

392.5

 

0.83

 

3,881.7

 

828.1

 

645.5

 

377.1

 

0.80

 

 

Wholesale Division

 

 

 

6M14

 

6M13

 

 

 

Net sales

 

EBITDA

 

Operating Income

 

Net Income

 

EPS

 

Net sales

 

EBITDA

 

Operating Income

 

Net Income

 

EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported

 

1,739.4

 

513.6

 

456.3

 

n.a.

 

n.a.

 

1,661.0

 

474.5

 

421.4

 

n.a.

 

n.a.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

> Adjustment for Alain Mikli restructuring

 

 

 

 

 

 

 

 

 

 

 

 

 

9.0

 

9.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted

 

1,739.4

 

513.6

 

456.3

 

n.a.

 

n.a.

 

1,661.0

 

483.5

 

430.4

 

n.a.

 

n.a.

 

 

13



 

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

Millions of Euro

 

Luxottica Group

 

 

 

2Q14

 

2Q13

 

 

 

Net sales

 

EBITDA

 

Operating Income

 

Net Income

 

EPS

 

Net sales

 

EBITDA

 

Operating Income

 

Net Income

 

EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported

 

2,060.0

 

488.2

 

396.1

 

235.2

 

0.49

 

2,017.6

 

453.7

 

361.7

 

212.0

 

0.45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

> Adjustment for Alain Mikli restructuring

 

 

 

 

 

 

 

 

 

 

 

 

 

9.0

 

9.0

 

5.9

 

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted

 

2,060.0

 

488.2

 

396.1

 

235.2

 

0.49

 

2,017.6

 

462.7

 

370.7

 

217.9

 

0.46

 

 

Wholesale Division

 

 

 

2Q14

 

2Q13

 

 

 

Net sales

 

EBITDA

 

Operating Income

 

Net Income

 

EPS

 

Net sales

 

EBITDA

 

Operating Income

 

Net Income

 

EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported

 

934.8

 

291.8

 

262.3

 

n.a.

 

n.a.

 

880.0

 

260.8

 

233.0

 

n.a.

 

n.a.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

> Adjustment for Alain Mikli restructuring

 

 

 

 

 

 

 

 

 

 

 

 

 

9.0

 

9.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted

 

934.8

 

291.8

 

262.3

 

n.a.

 

n.a.

 

880.0

 

269.8

 

242.0

 

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 2013

 

2Q 2014

 

6M 2013

 

6M 2014

 

FY 2013

 

LTM June 30, 2014

 

Net income/(loss)

 

212.0

 

235.2

 

371.2

 

392.5

 

544.7

 

566.0

 

(+)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to non-controlling interest

 

1.5

 

1.7

 

2.9

 

3.3

 

4.2

 

4.6

 

(+)

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

120.1

 

133.3

 

210.5

 

222.7

 

407.5

 

419.7

 

(+)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (income)/expense

 

28.1

 

26.0

 

51.9

 

47.8

 

99.3

 

95.2

 

(+)

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

92.0

 

92.0

 

182.6

 

181.7

 

366.6

 

365.7

 

(+)

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

453.7

 

488.2

 

819.1

 

848.0

 

1,422.3

 

1,451.3

 

(=)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

2,017.6

 

2,060.0

 

3,881.7

 

3,902.3

 

7,312.6

 

7,333.2

 

(/)

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA margin

 

22.5

%

23.7

%

21.1

%

21.7

%

19.5

%

19.8

%

(=)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16



 

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

Millions of Euro

 

 

 

2Q 2013 (2)

 

2Q 2014

 

6M 2013 (2)

 

6M 2014

 

FY 2013 (1,2)

 

LTM June 30, 2014 (1,2)

 

Adjusted net income/(loss)

 

217.9

 

235.2

 

377.1

 

392.5

 

617.3

 

632.7

 

(+)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to non-controlling interest

 

1.5

 

1.7

 

2.9

 

3.3

 

4.2

 

4.6

 

(+)

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted provision for income taxes

 

123.2

 

133.3

 

213.6

 

222.7

 

343.9

 

353.0

 

(+)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (income)/expense

 

28.1

 

26.0

 

51.9

 

47.8

 

99.3

 

95.2

 

(+)

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

92.0

 

92.0

 

182.6

 

181.7

 

366.6

 

365.7

 

(+)

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

462.7

 

488.2

 

828.1

 

848.0

 

1,431.3

 

1,451.3

 

(=)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

2,017.6

 

2,060.0

 

3,881.7

 

3,902.3

 

7,312.6

 

7,333.2

 

(/)

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin

 

22.9

%

23.7

%

21.3

%

21.7

%

19.6

%

19.8

%

(=)

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The adjusted figures exclude the following:

(1)(a) non-recurring costs for the tax audit relating to Luxottica S.r.l. (tax year 2007) of approximately Euro 27 million;

(b) non-recurring accrual for tax audits (tax years after 2007) of approximately Euro 40 million; and

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

 

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 assessthe 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, 2014

 

Dec. 31, 2013

 

Long-term debt (+)

 

2,226.8

 

1,716.4

 

Current portion of long-term debt (+)

 

304.0

 

318.1

 

Bank overdrafts (+)

 

80.9

 

44.9

 

Cash (-)

 

(1,183.2

)

(618.0

)

Net debt (=)

 

1,428.5

 

1,461.4

 

EBITDA (LTM and FY 2013)

 

1,451.3

 

1,422.3

 

Net debt/EBITDA

 

1.0x

 

1.0x

 

Net debt @ avg. exchange rates (1)

 

1,429.1

 

1,475.9

 

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

 

1.0x

 

1.0x

 

 


(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, 2014

 

Dec. 31, 2013 (2)

 

Long-term debt (+)

 

2,226.8

 

1,716.4

 

Current portion of long-term debt (+)

 

304.0

 

318.1

 

Bank overdrafts (+)

 

80.9

 

44.9

 

Cash (-)

 

(1,183.2

)

(618.0

)

Net debt (=)

 

1,428.5

 

1,461.4

 

Adjusted EBITDA (LTM and FY 2013)

 

1,451.3

 

1,431.3

 

Net debt/LTM Adjusted EBITDA

 

1.0x

 

1.0x

 

Net debt @ avg. exchange rates (1)

 

1,429.1

 

1,475.9

 

EBITDA @ avg. exchange rates (1)

 

1,451.3

 

1,431.3

 

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

 

1.0x

 

1.0x

 

 


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

(2)        Adjusted figures exclude the following:

(a) non-recurring costs for the tax audit relating to Luxottica S.r.l. (tax year 2007) of approximately Euro 27 million;

(b) non-recurring accrual for tax audits (tax years after 2007) of approximately Euro 40 million; and

(c) non-recurring Alain Mikli reorganization costs with an approximately Euro 9 million impact on operating income and an approximately Euro 6 million adjustment to net income.

 

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 2014

 

EBITDA (1)

 

848

 

Δ working capital

 

(111

)

Capex

 

(174

)

 

 

 

 

Operating cash flow

 

563

 

Financial charges (2)

 

(47

)

Taxes

 

(134

)

Extraordinary charges (3)

 

0

 

 

 

 

 

Free cash flow

 

381

 

 


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

(2)         Equals interest income minus interest expense

(3)         Equals extraordinary income minus extraordinary expense

 

22



 

Non-IAS/IFRS Measure: Free cash flow

Millions of Euro

 

 

 

2Q 2014

 

EBITDA (1)

 

488

 

Δ working capital

 

71

 

Capex

 

(93

)

 

 

 

 

Operating cash flow

 

466

 

Financial charges (2)

 

(24

)

Taxes

 

(119

)

Extraordinary charges (3)

 

(1

)

 

 

 

 

Free cash flow

 

321

 

 


(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, 2014

 

June 30, 2014

 

December 31, 2013

 

June 30, 2013

 

June 30, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

US$

 

1.37107

 

1.37035

 

1.32775

 

1.30583

 

1.31286

 

 

 

 

 

 

 

 

 

 

 

 

 

AUD

 

1.46989

 

1.49890

 

1.37655

 

1.31895

 

1.29503

 

 

 

 

 

 

 

 

 

 

 

 

 

GBP

 

0.81471

 

0.82134

 

0.84923

 

0.85048

 

0.85075

 

 

 

 

 

 

 

 

 

 

 

 

 

CNY

 

8.54380

 

8.44997

 

8.16304

 

8.03636

 

8.12587

 

 

 

 

 

 

 

 

 

 

 

 

 

JPY

 

140.00145

 

140.40280

 

129.59424

 

128.93703

 

125.38685

 

 

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

July 25, 2014

 

 

ENRICO CAVATORTA
CHIEF FINANCIAL OFFICER

 

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