LensCrafters 2011 Annual Report Download - page 123

| 47 >APPENDIXMANAGEMENT REPORT - APPENDIX
EBITDA AND EBITDA MARGIN
EBITDA represents net income attributable to Luxottica Group stockholders, before non-
controlling interest, provision for income taxes, other income/expense, depreciation and
amortization. EBITDA margin means EBITDA divided by net sales. We believe that EBITDA
is useful to both management and investors in evaluating our operating performance
compared with that of other companies in our 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 IAS/IFRS. We include
them in this Management Report 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 level 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 our method of calculating EBITDA may differ from methods
used by other companies. We recognize 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;