LensCrafters 2015 Annual Report Download - page 37

Management Report as of December 31, 2015 Page 33 of 35
∆ working capital 31
Capex (514)
Operating cash flow 1,437
Financial charges
(2)
(95)
Taxes (566)
Other—net (8)
Free cash flow 768
(1) EBITDA is not an IFRS measure; please see table on the earlier page for a reconciliation of EBITDA to net income.
(2) Equals interest income minus interest expense.
Net debt to EBITDA ratio
Net debt represents the sum of bank overdrafts, the current portion of long- term debt and long-term debt, less cash. The
ratio of net debt to EBITDA is a measure used by management to assess the Group’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 the 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 IFRS. Rather, these non-IFRS measures should be used
as a supplement to IFRS results to assist the reader in better understanding the operational performance of the Group. For
additional information on Group’s non-IFRS measures used in this report, see “NON-IFRS MEASURES – Adjusted
Measures” set forth above.
The Group cautions that these measures are not defined terms under 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 Group recognizes that the usefulness of EBITDA and the ratio of net debt to EBITDA as evaluative tools may have
certain limitations. Apart from the limitations stated above on EBITDA, 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 IFRS measurements, to assist in the evaluation of our operating performance and
leverage.
See the table below for a reconciliation of net debt to long-term debt, which is the most directly comparable IFRS financial
measure, as well as the calculation of the ratio of net debt to EBITDA. For a reconciliation of EBITDA to its most directly
comparable IFRS measure, see the table on the earlier page.