LensCrafters 2013 Annual Report Download - page 29

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Leonardo Del Vecchio, our chairman and principal stockholder, controls 61.36% of our voting power and is in a position to
affect our ongoing operations, corporate transactions and any matters submitted to a vote of our stockholders, including the
election of directors and a change in corporate control.
As of December 31, 2013, Mr. Leonardo Del Vecchio, the Chairman of our Board of Directors, through the
company Delfin S.à r.l., has voting rights over 293,048,525 Ordinary Shares, or 61.36% of the outstanding Ordinary Shares.
See Item 7—“Major Shareholders and Related Party Transactions.” As a result, Mr. Del Vecchio has the ability to exert
significant influence over our corporate affairs and to control the outcome of virtually all matters submitted to a vote of our
stockholders, including the election of our directors, the amendment of our Articles of Association or By-laws, and the
approval of mergers, consolidations and other significant corporate transactions.
Mr. Del Vecchio’s interests may conflict with or differ from the interests of our other stockholders. In situations
involving a conflict of interest between Mr. Del Vecchio and our other stockholders, Mr. Del Vecchio may exercise his
control in a manner that would benefit himself to the potential detriment of other stockholders. Mr. Del Vecchio’s significant
ownership interest could delay, prevent or cause a change in control of our company, any of which may be adverse to the
interests of our other stockholders.
If our procedures designed to comply with Section 404 of the Sarbanes-Oxley Act of 2002 cause us to identify material
weaknesses in our internal control over financial reporting, the trading price of our securities may be adversely impacted.
Our annual report on Form 20-F includes a report from our management relating to its evaluation of our internal
control over financial reporting, as required under Section 404 of the U.S. Sarbanes-Oxley Act of 2002, as amended. There
are inherent limitations on the effectiveness of internal controls, including collusion, management override and failure of
human judgment. In addition, control procedures are designed to reduce, rather than eliminate, business risks.
Notwithstanding the systems and procedures we have implemented to comply with these requirements, we may uncover
circumstances that we determine, with the assistance of our independent auditors, to be material weaknesses, or that
otherwise result in disclosable conditions. Any identified material weaknesses in our internal control structure may involve
significant effort and expense to remediate, and any disclosure of such material weaknesses or other conditions requiring
disclosure may result in a negative market reaction to our securities.
Financial Risks
If the Euro or the Chinese Yuan strengthens relative to certain other currencies or if the U.S. dollar weakens relative to the
Euro, our profitability as a consolidated group could suffer.
Our principal manufacturing facilities are located in Italy. We also maintain manufacturing facilities in China,
Brazil, India and the United States as well as sales and distribution facilities throughout the world. As a result, our results of
operations could be materially adversely affected by foreign exchange rate fluctuations in two principal areas:
• we incur most of our manufacturing costs in Euro and in Chinese Yuan, and receive a significant part of our
revenues in other currencies such as the U.S. dollar and the Australian dollar. Therefore, a strengthening of the
Euro or the Chinese Yuan relative to other currencies in which we receive revenues could negatively impact the
demand for our products or decrease our profitability in consolidation, adversely affecting our business and
results of operations; and
• a substantial portion of our assets, liabilities, revenues and costs are denominated in various currencies other
than Euro, with a substantial portion of our revenues and operating expenses being denominated in U.S. dollars.
As a result, our operating results, which are reported in Euro, are affected by currency exchange rate
fluctuations, particularly between the U.S. dollar and the Euro.
As our international operations grow, future changes in the exchange rate of the Euro against the U.S. dollar and
other currencies may negatively impact our reported results, although we have in place policies designed to manage such risk.