LensCrafters 2003 Annual Report Download - page 15

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fiscal years; that is for the single quarters of each year, for six-month periods, for nine-month periods and for the full
fiscal years 1994 through 2003.
AVERAGE EURO/U.S. DOLLAR EXCHANGE RATE OF RELEVANT PERIOD
2003 2002 2001 2000 1999
First Quarter 1.0730 0.8766 0.9230 0.9859 1.1207
Second Quarter 1.1372 0.9198 0.8721 0.9326 1.0567
Six-month 1.1049 0.8980 0.8990 0.9591 1.0873
Third Quarter 1.1248 0.9838 0.8895 0.9041 1.0483
Nine-Month 1.1117 0.9277 0.8956 0.9400 1.0737
Fourth Quarter 1.1882 0.9982 0.8959 0.8676 1.0370
TWELVE-MONTH 1.1307 0.9450 0.8957 0.9209 1.0642
1998(1) 1997(1) 1996(1) 1995(1) 1994(1)
First Quarter 1.0802 1.1823 1.2307 1.1793 1.1497
Second Quarter 1.0944 1.1457 1.2443 1.1613 1.2063
Six-month 1.0873 1.1634 1.2376 1.1711 1.1778
Third Quarter 1.1130 1.0991 1.2727 1.2081 1.2325
Nine-Month 1.0961 1.1405 1.2493 1.1816 1.1957
Fourth Quarter 1.1765 1.1255 1.2721 1.2160 1.2198
TWELVE-MONTH 1.1152 1.1367 1.2549 1.1887 1.2013
(1) Through 1998 the Euro/U.S. Dollar exchange rate has been calculated through the Lira/U.S. Dollar exchange rate, converted by the fixed rate
Lire 1,936.27 = 1.00
FINANCIAL REVIEW
The section Financial Review contains a discussion of Luxottica Group’s operational results and its financial
condition and should be read together with, and is qualified in its entirety by reference to, the consolidated financial
statements included elsewhere in this Annual Report.
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Luxottica Group prepares its consolidated financial statements in accordance with accounting principles generally
accepted in the U.S. (“U.S. GAAP”). For the reader’s convenience a more detailed profit and loss statement for the
three fiscal years ending December 31, 2001, 2002 and 2003, is included therewith before the consolidated financial
statements.
FIGURES DENOMINATED IN U.S. DOLLARS
Luxottica Group accounts for its foreign currency denominated transactions and foreign operations in accordance
with Statement of Financial Accounting Standards (“SFAS”) No. 52, Foreign Currency Translation. The financial
statements of foreign subsidiaries are translated into Euro, which is the functional and reporting currency of Luxottica
Group’s consolidated financial statements. Assets and liabilities of foreign subsidiaries are translated at year-end
exchange rates. Results of operations are translated using the average exchange rates prevailing throughout the year.
The resulting cumulative translation adjustments have been recorded as a separate component of accumulated other
comprehensive income. Transactions in foreign currencies are recorded at the exchange rate in effect at the
transaction date.
Since the first quarter of 1992, Luxottica Group has converted its consolidated results of operations in public
releases of such results into U.S. Dollars at the average rate of exchange for each period or fiscal year, as the case
may be, based on rates in effect in Milan, Italy on each business day in such period or year, divided by the total
number of such business days. The conversion of the statements of operations from Euro into U.S. Dollars at the
average exchange rate for each period, rather than the period-end exchange rate (which Luxottica Group uses to
convert the assets and liabilities statement), is consistent with the policy, in accordance with U.S. GAAP, of converting
the results of non-Euro subsidiaries from the local currencies into Euro at the respective average exchange rates
during the applicable periods when calculating the consolidated financial statements in Euro.
Notwithstanding the foregoing, however, amounts in Euro set forth in Luxottica Group’s audited consolidated
financial statements, its annual report on Form 20-F and its quarterly reports on Form 6-K will, to the extent required
by U.S. law and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), be translated for
convenience into U.S. Dollars applying the noon buying rate of the Euro, as certified for custom purposes by the
Federal Reserve Bank of New York (the so-called “noon buying rate”) as at the end of each period.
It must be noted that, in Luxottica Group’s view, the presentation of its consolidated financial statements
denominated in Euro is a more accurate measure of its results, due to the distorting effects caused by translations of
results in other currencies. Such translations should not be construed as representations that the Euro amounts could
be converted into U.S. Dollars at that or any other rate. Set forth below, for the convenience of the readers of this
report, is a table indicating the average rate of exchange Euro/U.S. Dollar used for each significant period and for ten
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS