LensCrafters 2009 Annual Report Download - page 123

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ANNEXES | 121 <
NON-US GAAP MEASURE: NET DEBT AND NET DEBT/EBITDA
(Millions of Euro) Dec. 31, 2009 Dec. 31, 2008
Long-term debt (+) 2,404.2 2,519.3
Current portion of long-term debt (+) 166.3 286.2
Bank overdrafts (+) 149.0 432.5
Cash (-) (380.1) (288.5)
Net debt (=) 2,339.3 2,949.5
EBITDA 869.1 1,014.7
Net debt/EBITDA 2.7x 2.9x
Net debt @ avg. exchange rates (1) 2,383.9 2,821.2
Net debt @ avg. exchange rates (1) / EBITDA 2.7x 2.8x
(1) Calculated using the respective 12-month average exchange rate as of December 31, 2009 and the 12-month average exchange rate as of December 31, 2008, which
were €1 =US$ 1.3947 and €1 = US$ 1.4707, respectively.
NON-US GAAP MEASURES: FREE CASH FLOW
Free cash fl ow represents net income before non-controlling interests, taxes, other income/expense, inter-
est 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
fl ow is useful to both management and investors in evaluating the Company’s operating performance com-
pared with other companies in its industry. In particular, our calculation of free cash fl ow provides a clearer
picture of the Company’s ability to generate net cash from operations, which it uses to cover mandatory
debt service requirements and to fund discretionary investments, pay dividends or pursue other strategic
opportunities.
Free cash fl ow is not a measure of performance under accounting principles generally accepted in the
United States (US GAAP). The Company includes 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 defi ne the metrics used and confi rm their calculation; and
• share this measure with all investors at the same time.
Free cash fl ow is not meant to be considered in isolation or as a substitute for items appearing on our
fi nancial statements prepared in accordance with US GAAP.
Rather, this non-GAAP measure should be used as a supplement to US GAAP results to assist the reader in
better understanding the operational performance of the Company.
The Company cautions that this measure is not a defi ned term under US GAAP and its defi nition should be
carefully reviewed and understood by investors.
Investors should be aware that Luxottica Group’s method of calculation of free cash fl ow may differ from
methods used by other companies.