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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTER ENDED JUNE 30, 2015
COMMISSION FILE NO. 1 - 10421

LUXOTTICA GROUP S.p.A.

PIAZZALE LUIGI CADORNA 3, MILAN, 20123 ITALY
(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.        Form 20-F ý        Form 40-F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o    No ý

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-                        


INDEX TO FORM 6-K

Item 1    Management report on the interim consolidated financial results as of June 30, 2015

    1  


Item 2    Financial Statements:


 

 


 

 



 


–Consolidated Statement of Financial Position for the periods ended June 30, 2015 and December 31, 2014


 

 


20

 



 


–Consolidated Statement of Income for the three-month periods ended June 30, 2015 and 2014 and for the sixth-month periods ended June 30, 2015 and 2014


 

 


21

 



 


–Consolidated Statement of Comprehensive Income for the three-month periods ended June 30, 2015 and 2014 and for the sixth-month periods ended June 30, 2015 and 2014


 

 


22

 



 


–Consolidated Statement of Changes in Equity for the periods ended June 30, 2015 and 2014


 

 


23

 



 


–Consolidated Statement of Cash Flows for the periods ended June 30, 2015 and 2014


 

 


24

 



 


–Consolidated Statement of Financial Position as of June 30, 2015 and December 31, 2014 pursuant to Consob Resolution No. 15519 dated July 27, 2006


 

 


26

 



 


–Notes to the Condensed Consolidated Financial Statements as of June 30, 2015


 

 


28

 


Attachment 1


 


  Exchange rates used to translate financial statements prepared in currencies other than the Euro


 

 


54

 


Attachment 2


 


  Investments of Luxottica Group S.p.A representing ownership interests in excess of 10 percent (pursuant to Section 125 Consob Regulation 11971/99)


 

 


55

 


Attachment 3


 


  Certification of the consolidated financial statements pursuant to Article 154-bis of the Legislative Decree 58/98


 

 


63

 


Attachment 4


 


  Auditors's report


 

 


64

 

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Corporate Management

Board of Directors

        In office until the approval of the financial statements as of and for the year ending December 31, 2017

Chairman   Leonardo Del Vecchio
Deputy Chairman   Luigi Francavilla
CEO Markets   Adil Mehboob-Khan
CEO Product and Operations   Massimo Vian
Directors   Marina Brogi* (Lead independent Director)
    Luigi Feola*
    Elisabetta Magistretti*
    Mario Notari
    Karl Heinz Salzburger*
    Maria Pierdicchi*
    Luciano Santel*
    Cristina Scocchia*
    Sandro Veronesi*
    Andrea Zappia*

*
Independent director

Human Resources Committee   Andrea Zappia (President)
    Marina Brogi
    Mario Notari

Internal Control Committee

 

Elisabetta Magistretti (Chairperson)
    Luciano Santel
    Cristina Scocchia

Board of Statutory Auditors

        In office until the approval of the financial statements as of and for the year ending December 31, 2017

Regular Auditors   Francesco Vella (Chairman)
    Alberto Giussani
    Barbara Tadolini

Alternate Auditors

 

Maria Venturini
    Roberto Miccù

Officer Responsible for Preparing the Company's

 

 
Financial Reports   Stefano Grassi

Auditing Firm

 

PricewaterhouseCoopers SpA

        Until approval of the financial statements as of and for the year ending December 31, 2020


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Luxottica Group S.p.A.
Headquarters and registered office • Piazzale Luigi Cadorna, 3, 20123 Milan, Italy
Capital Stock € 28,993,602.30
authorized and issued

ITEM 1. MANAGEMENT REPORT ON THE INTERIM
FINANCIAL RESULTS AS OF JUNE 30, 2015
(UNAUDITED)

        The following should be read in connection with the disclosure contained in the consolidated financial statements as of December 31, 2014, which includes a discussion of risks and uncertainties that can influence the Group's operational results or financial position. During the first six months of 2015, there were no changes to risks that were reported as of December 31, 2014.

1.     OPERATING PERFORMANCE FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2015

        The Group's growth in the first half of 2015 was significantly impacted by the strengthening of certain currencies in which it operates. At constant exchange rates(1), the Group confirmed solid growth in the primary markets in which it conducts business.

        Net sales increased from Euro 3,902.3 million in the first six months of 2014 to Euro 4,666.7 million in the first six months of 2015 (19.6 percent at current exchange rates and 5.1 percent at constant exchange rates(1)). Adjusted net sales(2) increased to Euro 4,752.5 million in the first half of 2015 (+21.8 percent at current exchange rates and +6.9 percent at constant exchange rates1). Adjusted net sales were impacted, starting from July 1, 2014, by the modification of an EyeMed reinsurance agreement with an existing underwriter whereby the Company assumes less reinsurance revenues and less claims expense. The impact of the new contract for the six-month period ended June 30, 2015 is a reduction in net sales and a corresponding reduction in cost of sales of Euro 85.8 million, respectively (the "EyeMed Adjustment").

        Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA")(3) in the first six months of 2015 increased by 29.0 percent to Euro 1,094.2 million from Euro 848.0 in the first half of 2014.

        Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")3, which excludes Oakley's integration and other minor projects costs, in the first six months of 2015 increased by 31.4 percent to Euro 1,114.6 million from Euro 848.0 in the first half of 2014.

        Operating income for the first half of 2015 increased by 28.8 percent to Euro 858.5 million from Euro 666.3 million during the same period of the previous year. The Group's operating margin continued to grow, rising from 17.1 percent in 2014 to 18.4 percent in 2015.

        Adjusted operating income(4) for the first half of 2015 increased by 31.9 percent to Euro 878.9 million. The Group's adjusted operating margin(5) continued to grow, rising from 17.1 percent in 2014 to 18.5 percent in 2015.

        In the first six months of 2015 net income attributable to Luxottica Stockholders increased by 28.7 percent to Euro 505.1 million from Euro 392.5 million in the same period of 2014. Earnings per share ("EPS") was Euro 1.05 and EPS expressed in USD was 1.18 (at an average rate of Euro/USD of 1.1158).

   


(1)
We calculate constant exchange rates by applying to the current period the average exchange rates between the Euro and the relevant currencies of the various markets in which we operated during the three-month periods ended June 30, 2014. Please refer to Attachment 1 for further details on exchange rates.
(2)
For a further discussion of adjusted net sales, see page 13—"Non-IFRS Measures.".
(3)
For a further discussion of EBITDA and adjusted EBITDA, see page 13—"Non-IFRS Measures."
(4)
For a further discussion of adjusted operating income see page 13—"Non-IFRS Measures."
(5)
For a further discussion of adjusted operating margin see page 13—"Non-IFRS Measures."

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        In the first six months of 2015 adjusted net income attributable to Luxottica Stockholders(6) increased by 33.7 percent to Euro 524.7 million. Adjusted earnings per share(7) ("Adjusted EPS") was Euro 1.10 and EPS expressed in USD was 1.22 (at an average rate of Euro/USD of 1.1158).

        Careful control of our working capital as well as a significant improvement in our operating results lead to strong free cash flow(8) generation equal to Euro 299 million. Net debt as of June 30, 2015 was Euro 1,447.0 million (Euro 1,012.9 million at the end of 2014), with a ratio of net debt to EBITDA(9) of 0.8 (0.7x as of December 31, 2014).

2.     SIGNIFICANT EVENTS DURING THE SIX-MONTH PERIOD ENDED JUNE 30, 2015

January

        On January 19, 2015 the Board of Directors appointed Adil Mehboob-Khan as the Group CEO for Markets and Massimo Vian as the Group CEO for Product and Operations. The appointment of Adil Mehboob-Khan and Massimo Vian, entrusting them with all executive responsibilities, completed the Group's organizational change process which is aimed at providing governance that is more aligned to the global competitive landscape and able to fully grasp growth opportunities. It also unites the Group's organizational model with its strategic vision.

April

        At the Stockholders' Meeting on April 24, 2015, Group's stockholders approved the Statutory Financial Statements as of December 31, 2014 as proposed by the Board of Directors and the distribution of a cash dividend of Euro 1.44 per ordinary share. The aggregate dividend amount of Euro 689.7 million was fully paid in May 2015.

May

        On May 14, 2015, the Company and Prada S.p.A., part of Prada Group, announced the renewal of an exclusive license agreement for the design, production and worldwide distribution of prescription frames and sunglasses under the Prada and Miu Miu brands. The 10-year agreement will extend through December 31, 2025.

        On May 19, 2015, the Company announced the grant of free treasury shares to the Group's employees in Italy in honor of the 80th birthday of its Chairman and Founder, Mr. Leonardo Del Vecchio. This share award is a gift from the Founder, with a value of approximately Euro 9 million and an aggregate maximum amount of 140,000 Luxottica Group treasury shares to be distributed. Delfin S.à.r.l. assumed all costs and expenses of the share grant.

June

        On June 25, 2015, the Company signed an agreement to enhance the market liquidity of its shares in compliance with CONSOB's market practices permitted under resolution no. 16839 adopted on March 19, 2009 regarding activity to support market liquidity. The agreement is between the Company and Kepler Capital Markets SA (the "Intermediary"), with its corporate headquarters in Paris, France, Avenue Kléber, 112 and registered with the Paris Commercial Register n. 413 064 841.

   


(6)
For a further discussion of adjusted net income attributable to Luxottica Stockholders see page 13—"Non-IFRS Measures."
(7)
For a further discussion of adjusted earnings per share see page 13—"Non-IFRS Measures."
(8)
For a further discussion of free cash flow, see page 13—"Non-IFRS Measures."
(9)
For a further discussion of net debt and net debt to adjusted EBITDA, see page 13—"Non-IFRS Measures."

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3.     FINANCIAL RESULTS

        We are a market leader in the design, manufacture and distribution of fashion, luxury, sport and performance eyewear, with net sales reaching over Euro 7.6 billion in 2014, approximately 78,000 employees and a strong global presence. We operate in two industry segments: (i) manufacturing and wholesale distribution; and (ii) retail distribution. See Note 5 of the Notes to the Consolidated Financial Statements as of June 30, 2015 for additional disclosures about our operating segments. Through our manufacturing and wholesale distribution segment, we are engaged in the design, manufacture, wholesale distribution and marketing of proprietary and designer lines of mid- to premium-priced prescription frames and sunglasses. We operate our retail distribution segment principally through our retail brands, which include, among others, LensCrafters, Sunglass Hut, OPSM, Pearle Vision, Laubman & Pank, Oakley "O" Stores and Vaults, David Clulow, GMO and our Licensed Brands (Sears Optical and Target Optical).

        As a result of our numerous acquisitions and the subsequent expansion of our business activities in the United States through these acquisitions, our results of operations, which are reported in Euro, are susceptible to currency rate fluctuations between the Euro and the U.S. dollar. The Euro/U.S. dollar exchange rate has fluctuated to an average exchange rate of Euro 1.00 = U.S. $1.1158 in the first six months of 2015 from Euro 1.00 = U.S. $1.3703 in the first half of 2014. With the acquisition of OPSM and other businesses, our results of operations have been rendered more susceptible to currency fluctuations between the Euro and the Australian Dollar. Additionally, we incur part of our manufacturing costs in Chinese Yuan; therefore, the fluctuation of the Chinese Yuan could impact the demand of our products or our consolidated profitability. Although we engage in certain foreign currency hedging activities to mitigate the impact of these fluctuations, they have impacted our reported revenues and expenses during the periods discussed herein. The Group does not engage in long-term hedging activities to mitigate translation risk. This discussion should be read in conjunction with the risk factor discussion in Section 8 of the Management Report included with the 2014 Consolidated Financial Statements.

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RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014

 
  Six months ended June 30,
 
   
(Amounts in thousands of Euro)
  2015
  % of
net sales

  2014
  % of
net sales

 
   

Net sales

    4,666,712     100 %   3,902,313     100.0 %

Cost of sales

    1,476,094     31.6 %   1,349,814     34.6 %

Gross profit

    3,190,617     68.4 %   2,552,499     65.4 %

Selling

    1,397,199     29.9 %   1,120,103     28,7 %

Royalties

    89,565     1.9 %   75,629     1.9 %

Advertising

    305,974     6.6 %   248,794     6.4 %

General and administrative

    539,350     11.6 %   441,627     11.3 %

Total operating expenses

    2,332,088     50.0 %   1,886,153     48.3 %

Income from operations

    858,529     18.4 %   666,346     17.1 %

Other income/(expense)

                         

Interest income

    5,384     0.1 %   5,840     0.1 %

Interest expense

    (58,696 )   (1.3 )%   (53,318 )   (1.4 )%

Other—net

    710     0.0 %   (353 )   0.0 %

Income before provision for income taxes

    805,927     17.3 %   618,514     15.8 %

Provision for income taxes

    (299,156 )   (6.4 )%   (222,667 )   (5.7 )%

Net income

    506,770     10.9 %   395,847     10.2 %

Attributable to

                         

—Luxottica Group stockholders

    505,113     10.8 %   392,541     10.1 %

—non-controlling interests

    1,658     0.1 %   3,306     0.1 %

NET INCOME

    506,770     10.9 %   395,847     10.2 %

 

 

        In order to represent the Group's operating performance on a consistent basis in this Management Report, net sales and operating expenses as represented in the Group's Consolidated Financial Statements have been adjusted in the tables below to take into account the following events:

        Net Sales.    Net sales increased by Euro 764.4 million, or 19.6% to Euro 4,666.7 million in the first half of 2015 from Euro 3,902.3 million in the same period of 2014. Euro 268.5 million and Euro 495.9 million of this increase was attributable to increased sales in the manufacturing and wholesale distribution segment and the retail distribution segment, respectively. Euro 565.1 million of the total increase of Euro 764.4 million is due to the strengthening of certain currencies compared to the Euro. Adjusted net sales in 2015, which include the EyeMed Adjustment of Euro 85.8 million, were Euro 4,752.5 million.

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        Please find the reconciliation between adjusted(10) net sales and net sales in the following table:

   
(Amounts in million of Euro)
  June 30,
2015

  June 30,
2014

 
   

Net sales

    4,666,7     3,902.3  

> EyeMed Adjustment

    85.8      

Adjusted net sales

    4,752.5     3,902.3  
   

        Net sales for the retail distribution segment increased by Euro 495.9 million, or 22.9%, to Euro 2,658.8 million in the first six months of 2015 from Euro 2,162.9 million in the same period of 2014. The effects from currency fluctuations between the Euro, which is our reporting currency, and the other currencies in which we conduct business, in particular the strengthening of the U.S. dollar and the Australian dollar compared to the Euro, increased net sales in the retail distribution segment by Euro 417.4 million. In addition, the increase in net sales for the period was partially attributable to a 4.6% increase in comparable store(11) sales. Adjusted(8) net sales of the retail division in the first six months of 2015, which include the Eyemed Adjustment of Euro 85.8 million, were Euro 2,744.6 million.

        Please find the reconciliation between adjusted(12) net sales of the retail division and net sales of the retail division in the following table:

   
(Amounts in millions of Euro)
  June 30,
2015

  June 30,
2014

 
   

Net sales

    2,658.8     2,162.9  

> EyeMed Adjustment

    85.8      

Adjusted net sales

    2,744.6     2,162.9  
   

        Net sales to third parties in the manufacturing and wholesale distribution segment increased in the first six months of 2015 by Euro 268.5 million, or 15.4%, to Euro 2,007.9 million from Euro 1,739.4 million in the same period of 2014. This increase occurred in most geographic areas in which the Group operates and was impacted by positive currency fluctuations, in particular the strengthening of the U.S. dollar and Australian dollar compared to the Euro, which increased net sales in the wholesale distribution segment by Euro 147.7 million. Additionally sales increased for most of our proprietary brands, in particular Ray-Ban and Oakley and for certain designer brands including Prada, Polo Ralph Lauren, Dolce & Gabbana and Michael Kors.

        In the first six months of 2015, net sales in the retail distribution segment accounted for approximately 57.0% of total net sales, as compared to approximately 55.4% of total net sales in the same period of 2014.

        In the first six months of 2015 and 2014, net sales in our retail distribution segment in the United States and Canada comprised 78.5% and 77.8%, respectively, of our total net sales in this segment. In U.S. dollars, retail net sales in the United States and Canada increased by 0.9% to U.S. $ 2,327.6 million in the first half of 2015 from U.S. $ 2,306.0 million in the same period of 2014. During the first six months of 2015, net sales in the retail distribution segment in the rest of the world (excluding the United States and Canada) comprised 21.5% of our total net sales in the retail distribution segment and increased by 19.3% to Euro 572.8 million in the first six months of 2015 from Euro 480.2 million, or 22.2% of our total net

   


(10)
For a further discussion of adjusted net sales, see page 13—"Non-IFRS Measures."
(11)
Comparable store sales reflects the change in sales from one period to another that, for comparison purposes, includes in the calculation only stores open in the more recent period that also were open during the comparable prior period in the same geographic area, and applies to both periods the average exchange rate for the prior period.
(12)
For a further discussion of adjusted net sales, see page 13—"Non-IFRS Measures."

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sales in the retail distribution segment, in the same period of 2014, mainly due to positive currency fluctuations.

        In the first six months of 2015, net sales to third parties in our manufacturing and wholesale distribution segment in Europe were Euro 816.0 million, comprising 40.6% of our total net sales in this segment, compared to Euro 774.4 million, or 44.5% of total net sales in this segment in the same period of 2014, increasing by Euro 41.1 million or 5.3% in 2014 as compared to the same period of 2014. Net sales to third parties in our manufacturing and wholesale distribution segment in the United States and Canada were U.S. $634.0 million and comprised 28.3% of our total net sales in this segment in the first six months of 2015, compared to U.S. $597.3 million, or 25.1% of total net sales in this segment, in the same period of 2014. The increase in net sales in the United States and Canada was primarily due to a general increase in consumer demand. In the first six months of 2015, net sales to third parties in our manufacturing and wholesale distribution segment in the rest of the world were Euro 623.9 million, comprising 31.1% of our total net sales in this segment, compared to Euro 529.1 million, or 30.4% of our net sales in this segment, in the same period of 2014, with an increase of Euro 94.8 million, or 17.9%, as of June 30 2015 as compared to the same period of 2014.

        Cost of Sales.    Cost of sales increased by Euro 126.3 million, or 9.4%, to Euro 1,476.1 million in the first six months of 2015 from Euro 1,349.8 million in the same period of 2014. As a percentage of net sales, cost of sales was 31.6% and 34.6% in the first six months of 2015 and 2014, respectively, with the percentage year-over-year change primarily driven by production efficiencies and the Eyemed Adjustment. In the first six months of 2015, the average number of frames produced daily in our facilities increased to approximately 355,000 as compared to approximately 293,000 in the same period of 2014. Adjusted cost of sales(13) of the retail distribution segment in the first six months of 2015, which include the EyeMed adjustment equal to Euro 85.8 million, was Euro 1,561.9 million.

        Please find the reconciliation between adjusted cost of sales(13) and cost of sales in the following table:

   
(Amounts in millions of Euro)
  June 30,
2015

  June 30,
2014

 
   

Cost of sales

    1,476.1     1,349.8  

> Eyemed Adjustment

    85.8      

Adjusted cost of sales

    1,561.9     1,349.8  
   

        Gross Profit.    Our gross profit increased by Euro 638.1 million, or 25.0%, to Euro 3,190.6 million in the first six months of 2015 from Euro 2,552.5 million in the same period of 2014. As a percentage of net sales, gross profit increased to 68.4% in the first six months of 2015 from 65.4% in the same period of 2014.

        Operating Expenses.    Total operating expenses increased by Euro 445.9 million, or 23.6%, to Euro 2,332.1 million in the first six months of 2015 from Euro 1,886.2 million in the same period of 2014. As a percentage of net sales, operating expenses increased to 50.0% in the first six months of 2015 from 48.3% in the same period of 2014. The increase is due to (i) the strengthening of certain currencies in which the Group operates, (ii) the costs incurred for Oakley's integration and other minor projects; and (iii) the overall growth of the Group's business. Adjusted operating expenses(14), excluding Oakley's integration and other minor project costs of Euro 20.4 million, increased by Euro 425.5 million to Euro 2,311.7 million. As a percentage of net sales adjusted operating expenses(14) were 48.6%.

   


(13)
For a further discussion of adjusted cost of sales, see page 13—"Non-IFRS Measures."
(14)
For a further discussion of adjusted operating expenses, see page 13—"Non-IFRS Measures."

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        Please find the reconciliation between adjusted operating expenses(14) and operating expenses in the following table:

   
(Amounts in millions of Euro)
  June 30,
2015

  June 30,
2014

 
   

Operating expenses

    2,332.1     1,886.2  

> Oakley's integration and other minor project costs

    (20.4 )    

Adjusted operating expenses

    2,311.7     1,886.2  

        Selling and advertising expenses (including royalty expenses) increased by Euro 348.2 million, or 24.1%, to Euro 1,792.7 million in the first six months of 2015 from Euro 1,444.5 million in the same period of 2014. Selling expenses increased by Euro 277.1 million, or 24.7%. Advertising expenses increased by Euro 57.2 million, or 23.0%. Royalties increased by Euro 13.9 million, or 18.4%. As a percentage of net sales selling and advertising expenses were 38.4% and 37.0% in the first half of 2015 and 2014, respectively. This increase is mainly due to the strengthening of certain currencies in which the Group operates.

        General and administrative expenses, including intangible asset amortization, increased by Euro 97.7 million, or 22.1%, to Euro 539.4 million in the first six months of 2015, as compared to Euro 441.6 million in the same period of 2014. As a percentage of net sales, general and administrative expenses were 11.6% in the first six months of 2015 compared to 11.3% in the same period of 2014. The increase is mainly due to the integration costs of Oakley and other minor project costs of Euro 20.4 million, the strengthening of certain currencies in which the Group operates and to the overall growth of the business of the Group.

        Adjusted general and administrative expenses(15), including intangible asset amortization and excluding Oakley's integration and other minor project costs of Euro 20.4 million, increased by Euro 77.3 million to Euro 519.0 million. As a percentage of net sales, adjusted general and administrative expenses(15) were 10.9%.

        Please find the reconciliation between adjusted general and administrative expenses(15) and general and administrative expenses in the following table:

   
(Amounts in millions of Euro)
  June 30,
2015

  June 30,
2014

 
   

General and administrative expenses

    539.4     1,886.2  

> Oakley's integration and other minor project costs

    (20.4 )    

Adjusted general and administrative expenses

    519.0     1,886.2  
   

        Income from Operations.    For the reasons described above, income from operations increased by Euro 192.2 million to Euro 858.5 million in the first six months of 2015 from Euro 666.3 million in the same period of 2014. As a percentage of net sales, income from operations increased to 18.4% in 2015 from 17.1% in 2014. Adjusted income from operations(16), excluding Oakley's integration costs and the costs of other minor projects of Euro 20.4 million, increased by Euro 212.6 million or 31.9% to Euro 878.9 million. As a percentage of net sales adjusted income from operations(16) were 18.5%.

   


(15)
For a further discussion of adjusted general and administrative expenses , see page 13—"Non-IFRS Measures."
(16)
For a further discussion of adjusted income from operations , see page 13—"Non-IFRS Measures."

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        Please find the reconciliation between adjusted income from operations(16) and income from operations in the following table:

   
(Amounts in millions of Euro)
  June 30,
2015

  June 30,
2014

 
   

Income from operations

    858.5     666.3  

> Oakley's integration and other minor project costs

    20.4      

Adjusted income from operations

    878.9     666.3  
   

        Other Income (Expense)—Net.    Other income (expense)—net was Euro (52.6) million in the first six months of 2015 as compared to Euro (47.8) million in the same period of 2014. Net interest expense was Euro 53.3 million in the first six months of 2015 as compared to Euro 47.5 million in the same period of 2014. The increase was mainly due to the strengthening of the U.S. dollar against the Euro and cancellation of the revolving credit facility in the amount of Euro 500 million, which resulted in the write-down of approximately Euro 3.9 million of capitalized financing costs.

        Net Income.    Income before taxes increased by Euro 187.4 million, or 30.3% to Euro 805.9 million in the first six months of 2015 from Euro 618.5 million in the same period of 2014. As a percentage of net sales, income before taxes increased to 17.3% in 2015, from 15.8% in 2014.

        Our effective tax rate was 36.3% and 36.0% in the first half of 2015 and 2014, respectively.

        Net income attributable to non-controlling interests was equal to Euro 1.7 million and Euro 3.3 million, in the first half of 2015 and 2014, respectively.

        Net income attributable to Luxottica Group stockholders increased by Euro 112.6 million, or 28.7% to Euro 505.1 million in the first six months of 2015 from Euro 392.5 million in the same period of 2014. Net income attributable to Luxottica Group stockholders as a percentage of net sales increased to 10.8% in the first six months of 2015 from 10.1% in 2014. Adjusted net income attributable to Luxottica Group stockholders(17), excluding Oakley's integration and other minor project costs of Euro 19.6 million, increased by Euro 132.2 million to Euro 524.7 million. As a percentage of net sales adjusted net income attributable to Luxottica Group stockholders was(17) 11.0%.

        Please find the reconciliation between adjusted net income attributable to Luxottica Group stockholders(17) and net income attributable to Luxottica Group stockholders in the following table:

   
(Amounts in millions of Euro)
  June 30,
2015

  June 30,
2014

 
   

Net income attributable Luxottica Stockholders

    505.1     392.5  

> Oakley's integration and other minor project costs

    19.6      

Adjusted Net income attributable Luxottica Stockholders

    524.7     392.5  
   

        Basic and diluted earnings per share were Euro 1.05 in the first six months of 2015 and Euro 0.83 and 0.82 in the same period of 2014.

   


(17)
For a further discussion of adjusted net income attributable to Luxottica Stockholders , see page 13—"Non-IFRS Measures."

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OUR CASH FLOWS

        The following table sets forth certain items included in our statements of consolidated cash flows included in Item 2 of this report for the periods indicated.

   
(Amounts in thousands of Euro)
  As of
June 30, 2015

  As of
June 30, 2014

 
   

A)

 

Cash and cash equivalents at the beginning of the period

    1,453,587     617,995  

B)

 

Net cash provided by operating activities

    500,070     513,417  

C)

 

Cash provided/(used) in investing activities

    (250,118 )   (213,754 )

D)

 

Cash provided/(used) in financing activities

    (705,199 )   259,740  

E)

 

Effect of exchange rate changes on cash and cash equivalents

    44,256     5,801  

F)

 

Net change in cash and cash equivalents

    (410,991 )   565,204  

G)

 

Cash and cash equivalents at the end of the period

    1,042,596     1,183,200  

 

 

        Operating Activities.    The Company's net cash provided by operating activities in the first six months of 2015 and 2014 was Euro 500.0 million and Euro 513.4 million, respectively.

        Depreciation and amortization were Euro 235.7 million in the first six months of 2015 as compared to Euro 181.7 million in the same period of 2014. The increase is mainly due to the strengthening of certain currencies in which the Groups operates.

        The change in accounts receivable was Euro (304.2) million in the first six months of 2015 as compared to Euro (249.3) million in the same period of 2014. This change in the first half of 2015 as compared to 2014 was primarily due to the higher volume of sales which was partially offset by an improvement in collections. The change in cash (used)/generated in inventory was Euro (63.5) million in the first six months of 2015 as compared to Euro 51.0 million in the first six months of 2014 is mainly due to the inaugural launch of the Michael Kors collection. The change in cash generated/(used) in accounts payable was Euro 88.2 million in the first six months of 2015 as compared to Euro (27.8) million in the same period of 2014. The change as compared to previous year was primarily due to the continuous improvement in payment terms and conditions. The change in cash (used)/generated in other assets and liabilities was Euro and Euro (8.9) million in the first six months of 2015 and Euro 37.7 million in the first six month of 2014, respectively. The change in the first half of 2015 as compared to the same period of 2014 was primarily due to the timing of payments of salaries to store personnel in the retail division in North America. Income taxes paid in the first six months of 2015 were (Euro 282.0) million as compared to Euro (134.3) million in the same period of 2014. The increase in income taxes paid in the first half of 2015 was due to the payment of Euro (91.6) million related to the tax audit of Luxottica S.r.l. by Italian authorities for the tax years from 2008 to 2011. Interest paid was Euro (63.6) million as compared to Euro (43.9) million in the first six months of 2015 and 2014, respectively. The increase is mainly due to interest accruing on bonds that were issued by the Group during the first half of 2014 with a payment being made with respect to these securities for the first time in the first half of 2015.

        Investing Activities.    The Company's net cash used in investing activities was Euro (250.1) million and Euro (213.8) million in the first six months of 2015 and 2014, respectively. The primary investment activities in the first six months of 2015 were related to (i) the purchase of tangible assets for Euro (148.7) million, (ii) the acquisition of intangible assets for Euro (83.4) million and (iii) the acquisition of the remaining 49% of Luxottica Netherlands for Euro (19.0) million. The primary investment activities in the first six months of 2014 were related to (i) the purchase of tangible assets for Euro (117.2) million, (ii) the acquisition of intangible assets for Euro (57.0) million and (iii) Euro (29.2) million related to the acquisition of glasses.com and other minor acquisitions related to Retail segment for Euro (10.3) million.

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        Financing Activities.    The Company's net cash provided by/(used in) financing activities was Euro (705.2) million and Euro 259.7 million in the first six months of 2015 and 2014, respectively. Cash provided by financing activities in the first half of 2015 consisted primarily of (689.7) million related to the payment of dividends to the Company's shareholders. Cash generated in the first six months of 2014 is due to (i) Euro 500.0 million related to the issuance of bonds, (ii) an increase in financial liabilities for Euro 35.4 million, (iii) Euro 51.2 million related to the exercise of stock options and (iv) Euro (308.3) million related to the payment of dividends to the Company's shareholders.

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OUR CONSOLIDATED STATEMENT OF FINANCIAL POSITION

   
ASSETS
(Amounts in thousands of Euro)
  June 30,
2015

  December 31,
2014

 
   

CURRENT ASSETS:

             

Cash and cash equivalents

    1,042,596     1,453,587  

Accounts receivable—net

    1,077,073     754,306  

Inventories—net

    812,792     728,404  

Other assets

    210,321     231,397  

Total current assets

    3,142,782     3,167,695  

NON-CURRENT ASSETS:

   
 
   
 
 

Property, plant and equipment—net

    1,383,697     1,317,617  

Goodwill

    3,543,975     3,351,263  

Intangible assets—net

    1,446,548     1,384,501  

Investments

    62,571     61,176  

Other assets

    116,670     123,848  

Deferred tax assets

    199,723     188,199  

Total non-current assets

    6,753,183     6,426,603  

TOTAL ASSETS

    9,895,965     9,594,297  

 

 


LIABILITIES AND STOCKHOLDERS' EQUITY

  June 30,
2015

  December 31,
2014

 
   

CURRENT LIABILITIES:

             

Short term borrowings

    128,672     151,303  

Current portion of long-term debt

    660,120     626,788  

Accounts payable

    833,060     744,272  

Income taxes payable

    122,989     42,603  

Short term provisions for risks and other charges

    136,639     187,719  

Other liabilities

    646,314     636,055  

Total current liabilities

    2,527,793     2,388,740  

NON-CURRENT LIABILITIES:

   
 
   
 
 

Long-term debt

    1,700,756     1,688,415  

Employee benefits

    97,690     138,475  

Deferred tax liabilities

    282,972     266,896  

Long term provisions for risks and other charges

    95,950     99,223  

Other liabilities

    90,607     83,770  

Total non-current liabilities

    2,267,975     2,276,778  

STOCKHOLDERS' EQUITY:

             

Luxottica Group stockholders' equity

    5,096,426     4,921,479  

Non-controlling interests

    3,771     7,300  

Total stockholders' equity

    5,100,197     4,928,779  

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

    9,895,965     9,594,297  

 

 

        As of June 30, 2015, total assets increased by Euro 301.7 million to Euro 9,896.0 million, compared to Euro 9,594.3 million as of December 31, 2014.

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        In the first six months of 2015, non-current assets increased by Euro 326.6 million, mainly due to an increase in intangible assets (including goodwill) of Euro 254.7 million, an increase in property, plant and equipment of Euro 66.1 million and an increase in deferred tax assets of Euro 11.5 million.

        The increase in intangible assets was due to the positive effects of foreign currency fluctuations of Euro 280.6 million and to the additions in the period of Euro 77.7 million which were partially offset by amortization in the period of Euro 101.8 million.

        The increase in property, plant and equipment was due to the positive currency fluctuation effects of Euro 69.1 million as of June 30, 2015 compared to December 31, 2014, to the additions in the period of Euro 139.2 million and partially offset by depreciation in the period of Euro 133.9 million.

        As of June 30, 2015 as compared to December 31, 2014:

        Our net financial position as of June 30, 2015 and December 31, 2014 was as follows:

   
(Amounts in thousands of Euro)
  June 30,
2015

  December 31,
2014

 
   

Cash and cash equivalents

    1,042,596     1,453,587  

Bank overdrafts

    (128,672 )   (151,303 )

Current portion of long-term debt

    (660,120 )   (626,788 )

Long-term debt

    (1,700,756 )   (1,688,415 )

Total net financial position

    (1,446,952 )   (1,012,918 )
   

        Bank overdrafts consist of the utilized portion of short-term uncommitted revolving credit lines borrowed by various subsidiaries of the Group. The interest rate applied to these credit lines depends on the currency and is usually floating.

        As of June 30, 2015, Luxottica together with our wholly-owned Italian subsidiaries had credit lines aggregating Euro 246.3 million. The interest rate is a floating rate of EURIBOR plus a margin on average of approximately 137 basis points. At June 30, 2015, Euro 0.1 million was utilized under these credit lines.

        As of June 30, 2015, our wholly-owned subsidiary Luxottica U.S. Holdings Corp. maintained unsecured lines of credit with an aggregate maximum availability of Euro 116.2 million (USD 130.0 million converted at the applicable exchange rate for the period ended June 30, 2015). The interest is at a floating rate of approximately LIBOR plus 50 basis points. At June 30, 2015, Euro 0.0 million was utilized under these credit lines and there was Euro 39.2 million in aggregate face amount of standby letters of credit outstanding.

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4.     RELATED PARTY TRANSACTIONS

        Our related party transactions are neither atypical nor unusual and occur in the ordinary course of our business. Management believes that these transactions are fair to the Company. These transactions are managed as arms-length market transactions. For further details regarding related party transactions, please refer to Note 29 of the Notes to the Consolidated Financial Statements as of June 30, 2015.

        On January 26, 2013 the Company elected to avail itself of the options provided by Article 70, Section 8, and Article 71, Section 1- bis, of CONSOB Issuers' Regulations and, consequently, will no longer comply with the obligation to make available to the public an information memorandum in connection with transactions involving significant mergers, spin-offs, increases in capital through contributions in kind, acquisitions and disposals.

5.     SUBSEQUENT EVENTS

        For a description of significant events after June 30, 2015 please refer to Note 35 of the Notes to the Consolidated Financial Statements as of June 30, 2015.

6.     2015 OUTLOOK

        The financial results reported for the first six months of 2015 lead management to an optimistic outlook for the full fiscal year primarily driven by the strong performance of the Group's brand portfolio.

NON-IFRS MEASURES

Adjusted measures

        In this Management Report we refer to certain performance measures that are not in accordance with IFRS. Such non-IFRS measures 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 our operational performance.

        Such measures are not defined terms under IFRS and their definitions should be carefully reviewed and understood by investors. Such non-IFRS measures are explained in detail and reconciled to their most comparable IFRS measures below.

        In order to provide a supplemental comparison of current period results of operations to prior periods, we have adjusted for certain non-recurring transactions or events.

        In the first half of 2015, we made adjustments to the following measures: net sales, cost of sales, operating income, net income, general and administrative expenses and income taxes. We adjusted the above items for the modification of the EyeMed reinsurance agreement referenced above with an impact for the six-month period ended June 30, 2015 equal to Euro 85.8 million (the "EyeMed Adjustment") and for Oakley integration costs and other minor project costs of Euro 20.4 million (Euro 19.6 million net of tax).

        The adjusted measures referenced above are not measures of performance in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board and endorsed by the European Union. The Group believes that these adjusted measures are useful to both management and investors in evaluating the Group's operating performance compared with that of other companies in its industry in order to provide a supplemental view of operations that exclude items that are unusual, infrequent or unrelated to our ongoing operations.

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        Non—IFRS measures such as EBITDA, EBITDA margin, free cash flow and the ratio of net debt to EBITDA are included in this Management Report in order to:

        See the tables below for a reconciliation of the adjusted measures discussed above to their most directly comparable IFRS financial measures. For a reconciliation of EBITDA to its most directly comparable IFRS measure, see the pages following the tables below (Amounts in millions of Euro):

   
Luxottica Group
  1H 2015  
 
  Net
sales

  Cost of
Sales

  EBITDA
  Operating
Income

  Net
Income

  Base
EPS

 
   

Reported

    4,666.7     (1,476.1 )   1,094.2     858.5     505.1     1.05  

> EyeMed Adjustment

    85.8     (85.8 )                

> Oakley's integration and other minor project costs

            20.4     20.4     19.6     0.05  

Adjusted

    4,752.5     (1,561.9 )   1,114.6     878.9     524.7     1.10  

 

EBITDA and EBITDA margin

        EBITDA represents net income attributable to Luxottica Group stockholders, before non-controlling interests, 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 to 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 meant to be considered in isolation or as a substitute for items appearing in 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 the Group's non-IFRS measures used in this report, see "NON-IFRS MEASURES—Adjusted Measures" set forth above.

        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:

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        We compensate for the foregoing limitations by using EBITDA as a comparative tool, together with IFRS measurements, to assist in the evaluation of our operating performance and leverage. The following table provides a reconciliation of EBITDA to net income, which is the most directly comparable IFRS financial measure, as well as the calculation of EBITDA margin on net sales:

Non-IFRS Measure: EBITDA and EBITDA margin

   
Millions of Euro
  1H 2014
  1H 2015
  FY 2014
  LTM June 30,
2015

 
   

Net income/(loss)

    392.5     505.1     642.6     755.2  

(+)

                         

Net income attributable to non-controlling interest

   
3.3
   
1.7
   
3.4
   
1.8
 

(+)

                         

Provision for income taxes

   
222.7
   
299.2
   
414.1
   
490.6
 

(+)

                         

Other (income)/expense

   
47.8
   
52.6
   
97.5
   
102.3
 

(+)

                         

Depreciation and amortization

   
181.7
   
235.7
   
384.0
   
438.0
 

(+)

                         

EBITDA

   
848.0
   
1,094.2
   
1,541.6
   
1,787.8
 

(=)

                         

Net sales

   
3,902.3
   
4,666.7
   
7,652.3
   
8,416.7
 

(/)

                         

EBITDA margin

   
21.7

%
 
23.4

%
 
20.1

%
 
21.2

%

(=)

                         
   

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Non-IFRS Measure: Adjusted EBITDA and Adjusted EBITDA margin

   
Millions of Euro
  1H 2014
  1H 2015(1,4)
  FY 2014(1,2,3)
  LTM June 30,
2015(1,2,3,4)

 
   

Adjusted net income/(loss)

    392.5     524.7     687.4     819.6  

(+)

                         

Net income attributable to non-controlling interest

   
3.3
   
1.7
   
3.4
   
1.8
 

(+)

                         

Adjusted provision for income taxes

   
222.7
   
300.0
   
389.2
   
466.5
 

(+)

                         

Other (income)/expense

   
47.8
   
52.6
   
97.5
   
102.3
 

(+)

                         

Depreciation and amortization

   
181.7
   
235.7
   
384.0
   
438.0
 

(+)

                         

Adjusted EBITDA

   
848.0
   
1,114.6
   
1,561.6
   
1,828.2
 

(=)

                         

Net sales

   
3,902.3
   
4,752.5
   
7,698.9
   
8,549.1
 

(/)

                         

Adjusted EBITDA margin

   
21.7

%
 
23.5

%
 
20.3

%
 
21.4

%

(=)

                         
   

The adjusted figures:

(1)
Include the EyeMed Adjustment. Starting from July 1, 2014 following the modification of an EyeMed reinsurance agreement with an existing underwriter, the Group assumes less reinsurance revenues and less claims expense. The impact of the new contract for the twelve-month period ended December 31, 2014 was Euro 46.6 million and for the six month-period ended June 30, 2015 was Euro 85.8 million.

(2)
Exclude the accrual for the tax audit relating to Luxottica S.r.l. (fiscal years from 2008 to 2011) of approximately Euro 30.0 million.

(3)
Exclude non-recurring costs of approximately Euro 20.0 million (Euro 14.5 million net of tax) related to the departure of the former Group CEOs.

(4)
Exclude approximately Euro 20.4 million (Euro 19.6 million net of tax) related to the integration of Oakley and other minor project costs.

Free Cash Flow

        Free cash flow represents EBITDA, as defined above, plus or minus the decrease/(increase) in working capital over the period, less capital expenditures, plus or minus interest income/(expense) and extraordinary items, minus taxes paid. Our calculation of free cash flow provides a clearer picture of our ability to generate net cash from operations, which is used for mandatory debt service requirements, to fund discretionary investments, pay dividends or pursue other strategic opportunities. For additional information on Group's non-IFRS measures used in this report, see "NON-IFRS MEASURES—Adjusted Measures" set forth above.

        Free cash flow is not meant to be considered in isolation or as a substitute for items appearing on our financial statements prepared in accordance with IFRS. Rather, this non-IFRS measure should be used as a supplement to IFRS results to assist the reader in better understanding the operational performance of the Group.

        The Group cautions that this measure is not a defined term under IFRS and its definition should be carefully reviewed and understood by investors.

        Investors should be aware that our method of calculation of free cash flow may differ from methods used by other companies. We recognize that the usefulness of free cash flow as an evaluative tool may have certain limitations, including:

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        We compensate for the foregoing limitations by using free cash flow as one of several comparative tools, together with IFRS measurements, to assist in the evaluation of our operating performance.

        The following table provides a reconciliation of free cash flow to EBITDA and the table above provides a reconciliation of EBITDA to net income, which is the most directly comparable IFRS financial measure:

Non-IFRS Measure: Free cash flow

   
(Amounts in millions of Euro)
  1H 2015
 
   

EBITDA(1)

    1,115  

D working capital

    (262 )

Capex

    (218 )

Operating cash flow

    635  

Financial charges(2)

    (53 )

Taxes

    (282 )

Other—net

    (1 )

Free cash flow

    299  
   
(1)
EBITDA is not an IFRS measure; please see table above 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. 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.

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        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.

Non-IFRS Measure: Net debt and Net debt/EBITDA

   
(Amounts in millions of Euro)
  June 30,
2015

  December 31,
2014

 
   

Long-term debt

    1,700.8     1,688.4  

(+)

             

Current portion of long-term debt

   
660.1
   
626.8
 

(+)

             

Bank overdrafts

   
128.7
   
151.3
 

(+)

             

Cash

   
(1,042.6

)
 
(1,453.6

)

(-)

             

Net debt

   
1,447.0
   
1,012.9
 

(=)

             

LTM EBITDA

   
1,787.8
   
1,541.6
 

Net debt/EBITDA

   
0.8

x
 
0.7

x

Net debt @ avg. exchange rates(1)

   
1,422.7
   
984.3
 

Net debt @ avg. exchange rates(1)/EBITDA

   
0.8

x
 
0.6

x
   
(1)
Net debt figures are calculated using the average exchange rates used to calculate the EBITDA figures.

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Non-IFRS Measure: Net debt and Net debt/Adjusted EBITDA

   
(Amounts in millions of Euro)
  June 30,
2015(2(b))

  December 31,
2014(2(a))

 
   

Long-term debt

    1,700.8     1,688.4  

(+)

             

Current portion of long-term debt

   
660.1
   
626.8
 

(+)

             

Bank overdrafts

   
128.7
   
151.3
 

(+)

             

Cash

   
(1,042.6

)
 
(1,453.6

)

(-)

             

Net debt

   
1,447.0
   
1,012.9
 

(=)

             

LTM Adjusted EBITDA

   
1,828.2
   
1,561.6
 

Net debt/LTM Adjusted EBITDA

   
0.8

x
 
0.6

x

Net debt @ avg. exchange rates(1)

   
1,422.7
   
984.3
 

Net debt @ avg. exchange rates(1)/LTM EBITDA

   
0.8

x
 
0.6

x
   
(1)
Net debt figures are calculated using the average exchange rates used to calculate the EBITDA figures.
(2)
Adjusted figures exclude:

(a)
The non-recurring expenses related to the departure of the former Group CEOs with an approximately Euro 20 million impact on operating income and Euro 14.5 million impact on net income.

(b)
Costs related to the integration of Oakley and other minor projects with an impact of Euro 20.4 million on operating income and Euro 19.6 million impact on net income.

FORWARD-LOOKING INFORMATION

        Throughout this report, management has made certain "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 which are considered prospective. These statements are made based on management's current expectations and beliefs and are identified by the use of forward-looking words and phrases such as "plans," "estimates," "believes" or "belief," "expects" or other similar words or phrases.

        Such statements involve risks, uncertainties and other factors that could cause actual results to differ materially from those which are anticipated. Such risks and uncertainties include, but are not limited to, our ability to manage the effect of the uncertain current global economic conditions on our business, our ability to successfully acquire new businesses and integrate their operations, our ability to predict future economic conditions and changes in consumer preferences, our ability to successfully introduce and market new products, our ability to maintain an efficient distribution network, our ability to achieve and manage growth, our ability to negotiate and maintain favorable license arrangements, the availability of correction alternatives to prescription eyeglasses, fluctuations in exchange rates, changes in local conditions, our ability to protect our proprietary rights, our ability to maintain our relationships with host stores, any failure of our information technology, inventory and other asset risk, credit risk on our accounts, insurance risks, changes in tax laws, as well as other political, economic, legal and technological factors and other risks and uncertainties described in our filings with the U.S. Securities and Exchange Commission. These forward- looking statements are made as of the date hereof, and we do not assume any obligation to update them.

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ITEM 2.    FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 
   
   
   
 
(Amounts in thousands of Euro)
  Note
reference

  June 30, 2015
  December 31, 2014
 

ASSETS

                   

CURRENT ASSETS:

   
 
   
 
   
 
 

Cash and cash equivalents

    6     1,042,596     1,453,587  

Accounts receivable

    7     1,077,073     754,306  

Inventories

    8     812,792     728,404  

Other assets

    9     210,321     231,397  

Total current assets

          3,142,782     3,167,695  

NON-CURRENT ASSETS:

   
 
   
 
   
 
 

Property, plant and equipment

    10     1,383,697     1,317,617  

Goodwill

    11     3,543,975     3,351,263  

Intangible assets

    11     1,446,548     1,384,501  

Investments

    12     62,571     61,176  

Other assets

    13     116,670     123,848  

Deferred tax assets

    14     199,723     188,199  

Total non-current assets

          6,753,183     6,426,603  

TOTAL ASSETS

          9,895,965     9,594,297  

LIABILITIES AND STOCKHOLDERS' EQUITY

   
 
   
 
   
 
 

CURRENT LIABILITIES:

   
 
   
 
   
 
 

Short-term borrowings

    15     128,672     151,303  

Current portion of long-term debt

    16     660,120     626,788  

Accounts payable

    17     833,060     744,272  

Income taxes payable

    18     122,989     42,603  

Short term provisions for risks and other charges

    19     136,639     187,719  

Other liabilities

    20     646,314     636,055  

Total current liabilities

          2,527,793     2,388,740  

NON-CURRENT LIABILITIES:

   
 
   
 
   
 
 

Long-term debt

    21     1,700,756     1,688,415  

Employee benefits

    22     97,690     138,475  

Deferred tax liabilities

    14     282,972     266,896  

Long term provisions for risks and other charges

    23     95,950     99,223  

Other liabilities

    24     90,607     83,770  

Total non-current liabilities

          2,267,975     2,276,778  

STOCKHOLDERS' EQUITY:

   
 
   
 
   
 
 

Capital stock

    25     28,993     28,900  

Legal reserve

    25     5,785     5,736  

Reserves

    25     4,624,534     4,318,124  

Treasury shares

    25     (67,996 )   (73,875 )

Net income

    25     505,113     642,596  

Luxottica Group stockholders' equity

    25     5,096,426     4,921,479  

Non-controlling interests

    26     3,771     7,300  

Total stockholders' equity

          5,100,197     4,928,779  

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

          9,895,965     9,594,297  

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CONSOLIDATED STATEMENT OF INCOME

 
   
   
   
   
   
 
 
  Note
reference

  Three Months ended June 30
  Six Months ended June 30
 
(Amounts in thousands of Euro)(1)
  2015(*)
  2014(*)
  2015
  2014
 

Net sales

    27     2,456,861     2,059,979     4,666,712     3,902,313  

Cost of sales

    27     748,208     685,672     1,476,094     1,349,814  

Gross profit

          1,708,653     (1,374,307 )   3,190,617     2,552,499  

Selling

    27     713,264     572,435     1,397,199     1,120,103  

Royalties

    27     45,651     39,626     89,565     75,629  

Advertising

    27     170,037     140,290     305,974     248,794  

General and administrative

    27     279,490     225,823     539,350     441,627  

Total operating expenses

          1,208,442     978,175     2,332,088     1,886,153  

Income from operations

          500,211     396,132     858,529     666,346  

Other income/(expense)

                               

Interest income

    27     2,385     3,009     5,384     5,840  

Interest expense

    27     (28,607 )   (27,289 )   (58,696 )   (53,318 )

Other—net

    27     (731 )   (1,698 )   710     (353 )

Income before provision for income taxes

          473,258     370,154     805,927     (618,514 )

Provision for income taxes

    27     (178,504 )   (133,285 )   (299,156 )   (222,667 )

Net income

          294,754     236,869     506,770     395,847  

Of which attributable to:

                               

—Luxottica Group stockholders

          294,728     235,214     505,113     392,541  

—Non-controlling interests

          26     1,655     1,658     3,306  

NET INCOME

          294,754     236,869     506,770     395,847  

Weighted average number of shares outstanding:

                               

Basic

    30     479,304,304     475,221,228     478,819,264     474,464,497  

Diluted

    30     481,121,637     478,436,606     480,763,466     477,917,675  

EPS:

                               

Basic

    30     0.61     0.49     1.05     0.83  

Diluted

    30     0.61     0.49     1.05     0.82  
(1)
Except per share data

(*)
Not subject to review or audit

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 
   
   
   
   
 
 
  Three Months ended
June 30

  Six Months ended
June 30

 
(Amounts in thousands of Euro)
  2015(*)
  2014(*)
  2015
  2014
 

Net income

    294,754     236,869     506,770     395,847  

Other comprehensive income:

                         

Items that may be reclassified subsequently to profit or loss:

                         

Currency translation differences

    (161,498 )   55,654     266,929     71,813  

Total items that may be reclassified subsequently to profit or loss:

    (161,498 )   55,654     266,929     71,813  

Items that will not be reclassified to profit or loss:

                         

Actuarial gain on defined benefit plans

    59,523     (7,788 )   47,135     (34,549 )

Related tax effect

    (21,120 )   3,263     (14,369 )   14,392  

Total items that will not be reclassified to profit or loss

    38,403     (4,525 )   32,766     (20,157 )

Total other comprehensive income—net of tax

    (123,095 )   51,129     299,695     51,656  

Total comprehensive income for the period

    171,659     287,999     806,466     447,504  

Attributable to:

                         

—Luxottica Group stockholders' equity

    171,788     286,313     804,798     443,862  

—Non-controlling interests

    (129 )   1,686     1,668     3,642  

Total comprehensive income for the period

    171,659     287,999     806,466     447,504  
(*)
Not subject to review or audit

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODS ENDED JUNE 30, 2015 AND 2014

 
  Capital stock    
   
   
   
   
   
   
   
 
 
  Legal
reserve

 

  Additional
paid-in
capital
 

  Retained
earnings

 

  Stock options
reserve

 

  Translation
of foreign
operations
and other

  Treasury
shares

 

  Stockholders'
equity

 

  Non-
controlling
interests
 

 
(Amounts in thousands of Euro,
except share data)

  Number of
shares

  Amount
 
   
 
  Note 25
  Note 26
 

Balance as of January 1, 2014

    477,560,673     28,653     5,711     412,063     3,958,076     268,833     (447,447 )   (83,060 )   4,124,828     7,107  

Total Comprehensive Income as of June 30, 2014

                    372,384         71,478         443,862     3,642  

Exercise of stock options

    2,972,345     178         50,988                     51,166      

Non-cash stock based compensation

                        18,501             18,501      

Excess tax benefit on stock options

                3,954                     3,954      

Granting of treasury shares to employees

                    (9,185 )           9,185          

Dividends

                    (308,343 )               (308,343 )   (1,350 )

Allocation to legal reserve

            24         (24 )                    

Balance as of June 30, 2014

    480,533,018     28,832     5,736     467,005     4,012,907     287,334     (375,969 )   (73,875 )   4,351,970     9,399  

Balance as of January 1, 2015

    481,671,583     28,900     5,736     484,865     4,230,560     300,659     (55,364 )   (73,875 )   4,921,479     7,300  

Total Comprehensive Income as of June 30, 2015

                    537,879         266,919         804,798     1,668  

Exercise of stock options

    1,555,122     93         37,751                     37,844      

Non-cash stock based compensation

                        25,534             25,534      

Excess tax benefit on stock options

                15,668                     15,668      

Purchase of treasury Shares

                                (3,786 )   (3,786 )    

Granting of treasury shares to employees

                    (9,664 )           9,664          

Change in consolidation perimeter

                    (15,397 )               (15,397 )   (3,594 )

Dividends

                    (689,714 )               (689,714 )   (1,603 )

Allocation to legal reserve

            49         (49 )                    

Balance as of June 30, 2015

    483,226,705     28,993     5,785     538,284     4,053,615     326,193     211,555     (67,996 )   5,096,426     3,771  

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CONSOLIDATED STATEMENT OF CASH FLOWS

 
   
   
   
 
(Amounts in thousands of Euro)
  Note
reference

  June 30, 2015
  June 30, 2014
 

Income before provision for income taxes

          805,927     618,514  

Stock-based compensation

          25,534     18,501  

Depreciation and amortization

    10/11     235,715     181,681  

Net loss fixed assets and other

    10/11     9,908     7,591  

Financial charges

          58,696     53,318  

Other non-monetary items

          (1,683 )   420  

Changes in accounts receivable

          (304,200 )   (249,328 )

Changes in inventories

          (63,466 )   50,998  

Changes in accounts payable

          88,157     (27,780 )

Changes in other assets/liabilities

          (8,918 )   37,702  

Total adjustments

          39,743     73,103  

Cash provided by operating activities

          845,670     691,617  

Interest paid

          (63,645 )   (43,913 )

Tax paid

          (281,955 )   (134,287 )

Net cash provided by operating activities

          500,070     513,417  

Additions of Property, plant and equipment

    10     (148,697 )   (117,181 )

Purchases of businesses—net of cash acquired(*)

          (18,990 )   (39,532 )

Change in investments

    12     999      

Additions to intangible assets

    11     (83,430 )   (57,041 )

Cash used in investing activities

          (250,118 )   (258,754 )
(*)
In the six three months of 2015 we acquired the remaining 49% of Luxottica Netherland for Euro (19.0) million.

Purchases of businesses—net of cash acquired in the first six months of 2014 included the purchase of glasses.com for Euro (29.2) million and other minor acquisition for Euro (10.3) million.

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CONSOLIDATED STATEMENT OF CASH FLOWS

 
   
   
   
 
(Amounts in thousands of Euro)
  Note
reference

  June 30, 2015
  June 30, 2014
 

Long-term debt:

                   

—Proceeds

    21     3.220     496,166  

—Repayments

    21     (22.651 )   (13,281 )

Short-term debt:

                   

—Proceeds

              35,382  

—Repayments

          (28,509 )    

Exercise of stock options

    25     37,844     51,166  

Purchase of treasury Shares

          (3,786 )    

Dividends

          (691,317 )   (309,693 )

Cash (used in)/provided financing activities

          (705,199 )   259,740  

(Decrease) increase in cash and cash equivalents

          (455,248 )   559,403  

Cash and cash equivalents, beginning of the period

          1,453,587     617,995  

Effect of exchange rate changes on cash and cash equivalents

          44,256     5,801  

Cash and cash equivalents, end of the period

          1,042,596     1,183,200  

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Pursuant to Consob Resolution No. 15519 dated July 27, 2006

 
   
   
   
   
   
 
(Amounts in thousands of Euro)
  Note
reference

  June 30, 2015
  Of which related
parties (note 29)

  December 31, 2014
  Of which related
parties (note 29)

 

ASSETS

                               

CURRENT ASSETS:

                               

Cash and cash equivalents

    6     1,042,596         1,453,587      

Accounts receivable

    7     1,077,073     13,432     754,306     10,168  

Inventories

    8     812,792         728,404      

Other assets

    9     210,321     2,570     231,397     3,245  

Total current assets

          3,142,782     16,003     3,167,695     13,414  

NON-CURRENT ASSETS:

   
 
   
 
   
 
   
 
   
 
 

Property, plant and equipment

    10     1,383,697         1,317,617      

Goodwill

    11     3,543,975         3,351,263      

Intangible assets

    11     1,446,548         1,384,501      

Investments

    12     62,571     50,330     61,176     49,478  

Other assets

    13     116,670     1,237     123,848     809  

Deferred tax assets

    14     199,723         188,199      

Total non-current assets

          6,753,183     51,567     6,426,603     50,287  

TOTAL ASSETS

          9,895,965     67,569     9,594,297     63,701  

LIABILITIES AND STOCKHOLDERS' EQUITY

   
 
   
 
   
 
   
 
   
 
 

CURRENT LIABILITIES:

   
 
   
 
   
 
   
 
   
 
 

Short-term borrowings

    15     128,672         151,303      

Current portion of long-term debt

    16     660,120         626,788      

Accounts payable

    17     833,060     21,926     744,272     19,978  

Income taxes payable

    18     122,989         42,603      

Short term provisions for risks and other charges

    19     136,639         187,719      

Other liabilities

    20     646,314     60     636,055     959  

Total current liabilities

          2,527,793     21,986     2,388,740     20,937  

NON-CURRENT LIABILITIES:

   
 
   
 
   
 
   
 
   
 
 

Long-term debt

    21     1,700,756         1,688,415      

Employee benefits

    22     97,690         138,475      

Deferred tax liabilities

    14     282,972         266,896      

Long term provisions for risks and other charges

    23     95,950         99,223      

Other liabilities

    24     90,607         83,770      

Total non-current liabilities

          2,267,975         2,276,778      

STOCKHOLDERS' EQUITY:

   
 
   
 
   
 
   
 
   
 
 

Capital stock

    25     28,993         28,900      

Legal reserve

    25     5,785         5,736      

Reserves

    25     4,624,534         4,318,124      

Treasury shares

    25     (67,996 )       (73,875 )    

Net income

    25     505,113         642,596      

Luxottica Group stockholders' equity

    25     5,096,426         4,921,479      

Non-controlling interests

    26     3,771         7,300      

Total stockholders' equity

          5,100,197         4,928,779      

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

          9,895,965     21,986     9,594,297     20,937  

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CONSOLIDATED STATEMENT OF INCOME
Pursuant to Consob Resolution No. 15519 dated July 27, 2006

 
   
   
   
   
   
 
(Amounts in thousands of Euro)
  Note
reference

  Six Months
ended June 30,
2015

  Of which
related
parties
(note 29)

  Six Months
ended June 30,
2014

  Of which
related
parties
(note 29)

 

Net sales

    27     4,666,712     13,860     3,902,313     18,988  

Cost of sales

    27     1,476,094     36,488     1,349,814     24,654  

Gross profit

          3,190,617     (22,628 )   2,552,499     (5,666 )

Selling

    27