De Rigo Reports Results for Full Year 2004 LONGARONE (BL), Italy,
April 15 /PRNewswire-FirstCall/ -- On April 14th, the board of
directors of De Rigo S.p.A. (NYSE:DER) approved the unaudited
consolidated results for full year 2004, which evidenced strong
growth in the Group's operating profitability. Highlights of the
Group's unaudited consolidated results for 2004 include: - Net
sales amounted to EUR 514.4 m(1), an increase of 1.9% from the EUR
504.8 m posted last year. The sales results confirmed the positive
trends in the Group's current businesses, as comparisons with the
prior year were affected by De Rigo's sale during July 2003 of the
controlling interest in Eyewear International Distribution ("EID"),
a joint venture with the Prada Group. Excluding EID's sales(2) from
the Group's results for 2003, the year on year increase in
consolidated net sales was 6.1%. - Income from operations before
depreciation and amortization(3) increased by 7.5% to EUR 55.7 m
from the EUR 51.8 m posted in 2003, and represented 10.8% of net
sales, as compared with 10.3% last year. - Income from operations
grew by 15.7% to EUR 28.8 m from the EUR 24.9 m recorded in 2003,
and represented 5.6% of net sales, as compared with 4.9% last year.
- Net income amounted to EUR 14.5 m, a decrease of 21.6% from the
EUR 18.5 m recorded in 2003, when earnings were positively affected
by the Group's gain on the disposal of its controlling interest in
EID, which contributed EUR 11.8 m to other income, net (including
EUR 3.7 m attributable to other investors, which was deducted from
the Group's consolidated results as part of minority interests).
Net income represented 2.8% of net sales, as compared with 3.7%
last year. - At 31st December 2004, the net financial position(4)
of the De Rigo Group was positive and amounted to EUR 6.2 m, as
compared with the net debt of EUR 3.6 m recorded at 31st December
2003, primarily as a result of 2004 net earnings and improvements
in working capital, that were reflected in an increase in cash and
cash equivalents and a decrease in borrowings. The results posted
by the Group in 2004 reflected the contribution of each of the
Company's business segments. The following table summarizes the
principal unaudited results of each of the Group's business
segments for the periods indicated in millions of EUR:
----------------- ---------------------- ---------------------
Income from operations before depreciation Group's % and % Business
Segments Sales Change amortization Change -----------------
---------------------- --------------------- 2004 2003 2004 2003
Wholesale & 134.5 136.2 -1.2% 21.3 18.4 +15.8% Manufacturing
Retail 389.8 361.5 +7.8% 34.4 31.2 +10.3% - D&A 248.9 230.8
+7.8% 10.9 10.1 +7.9% - GO 140.9 130.7 +7.8% 23.5 21.1 +11.4% EID -
19.8 -100.0% - 2.2 -100.0% Intercompany -9.9 -12.7 -22.0% - -
Eliminations ----------------- ----------------------
--------------------- Total 514.4 504.8 +1.9% 55.7 51.8 +7.5%
----------------- ---------------------- ---------------------
----------------- ---------------------- Group's Income from %
Business Segments operations Change -----------------
---------------------- 2004 2003 Wholesale & Manufacturing 16.2
13.6 +19.1% Retail 12.6 9.6 +31.3% - D&A 1.9 1.2 +58.3% - GO
10.7 8.4 +27.4% EID - 1.7 -100.0% Intercompany - - Eliminations
----------------- ---------------------- Total 28.8 24.9 +15.7%
----------------- ---------------------- Wholesale &
Manufacturing Sales of the wholesale & manufacturing segment
amounted to EUR 134.5 m, a decrease of 1.2% as compared with EUR
136.2 m posted in 2003. Excluding from the 2003 results sales made
by the wholesale & manufacturing business segment to EID prior
to its disposal, the segment's sales increased by 0.7%, reflecting
strong sales results in certain Far Eastern markets, particularly
Japan and Hong Kong, as well as in certain European markets,
including Greece and Spain Gross margins at the wholesale &
manufacturing segment also increased, reflecting both a reduction
in the cost of goods sold resulting from improved efficiencies in
the manufacturing process and a more favourable sales mix, as the
2003 results had also included relatively lower margin sales to
EID. The increase in gross margin was reflected in strong growth in
both income from operations before depreciation and amortization
and income from operations: income from operations before
depreciation and amortization increased by 15.8% to EUR 21.3 m from
the EUR 18.4 m recorded in 2003 and represented 15.8% of sales, as
compared with 13.5% last year; income from operations increased by
19.1% to EUR 16.2 m from the EUR 13.6 m posted in 2003, and
represented 12.0% of sales, as compared with 10.0% last year.
Retail Sales of the retail segment increased by 7.8% to EUR 389.8
m, as compared with the EUR 361.5 m posted in 2003. The increase in
sales reflected same store sales per working day growth of 6.0% at
General Optica ("GO"), the Group's Spanish retail chain, and 6.2%
in Pound Sterling terms at Dollond & Aitchison ("D&A"), the
Group's British retail chain, as well as GO's opening of 6 owned
shops and 4 franchised shops during 2004. Income from operations
before depreciation and amortization for the retail segment as a
whole increased by 10.3% to EUR 34.4 m, as compared with the EUR
31.2 m posted in 2003 and represented 8.8% of sales, as compared
with 8.6% last year. Income from operations for the segment as a
whole increased by 31.3% to 12.6 m from the EUR 9.6 m posted in
2003 and represented 3.2% of sales, as compared with 2.7% last
year. The segment's results reflect the contribution of each of the
Group's two retail chains: GO grew sales by 7.8% to EUR 140.9 m,
while its income from operations before depreciation and
amortization increased by 11.4% to EUR 23.5 m from the EUR 21.1 m
posted in 2003, representing 16.7% of sales as compared with 16.1%
last year. The increase in income from operations before
depreciation and amortization reflected both the growth in sales
due to increase in same store sales and the opening of both owned
and franchised stores, as well as a higher gross margin,
notwithstanding an increase in advertising expenses. Income from
operations increased by 27.4% to EUR 10.7 m from the EUR 8.4 m
posted in 2003, representing 7.6% of sales, as compared with 6.4%
last year. Income from operations increased at a higher rate than
income before depreciation and amortization, as depreciation and
amortization remained substantially stable, amounting to EUR 12.8 m
in 2004, as compared to EUR 12.7 m last year. D&A's sales grew
by 7.8% to EUR 248.9 m from the EUR 230.8 m posted in 2003. Sales
grew by 5.8% in Pound Sterling terms, reflecting the increase in
its value against the Euro, while same store sales per working day
in Pound Sterling terms increased by 6.2%. The increase in
D&A's sales was primarily attributable to the Company's
aggressive marketing campaigns, which drove increased sales of
higher quality products. As a result of the increase in sales,
income from operations before depreciation and amortization
increased by 7.9% to EUR 10.9 m from the EUR 10.1 m posted in 2003,
representing 4.4% of sales, the same percentage as last year.
Income from operations increased by 58.3% to EUR 1.9 m from the EUR
1.2 m posted in 2003, and represented 0.8% of sales, having
represented 0.5% last year. As at GO, income from operations
increased at a higher rate than income before depreciation and
amortization, as depreciation and amortization remained
substantially stable, amounting to EUR 9.0 m in 2004, as compared
to EUR 8.9 m last year. Additional information - Basic earnings per
share amounted to EUR 0.33 as compared with EUR 0.41 posted in 2003
and diluted earnings per share amounted to EUR 0.33 as compared
with EUR 0.41 last year. The stock options plan for the Group's
management was terminated on December, 31st 2004. - Income taxes
amounted to EUR 12.7 m, as compared with EUR 14.9 m in 2003. The
Group's income was taxed at an effective rate of 46.1%, as compared
with an effective tax rate of 39.5% last year. The increase in the
effective tax rate primarily reflected the fact that the portion of
the Group's 2003 income attributable to its gross gain on the sale
of the controlling interest in EID was taxed at a favourable tax
rate. - Additions to property, plant and equipment amounted to EUR
17.6 m in 2004, as compared with EUR 11.5 m last year. The increase
was primarily attributable to higher investments in the refitting
of existing stores and the opening of new stores in the retail
segment. - The Company is currently authorized to repurchase up to
4,400,000 of its ADSs (representing an equivalent number of
ordinary shares), through November 2005. At the date of this
announcement, the Company had repurchased a total of 2,448,000 ADSs
(representing an equivalent number of ordinary shares), at an
average price of 6.08 USD per ADS. Ennio De Rigo, Chairman of the
De Rigo Group, commented on 2004's results: "The Group's strong
commitment to recoup the sales lost as a result of the disposal of
EID was reflected in a slight overall increase in sales, while
improvements in our gross margin also contributed to our strong
operating results. We are working to capitalize on the
opportunities for sales growth afforded by all of the license
agreements we have recently entered into, as well as looking to
develop additional new business with Ermenegildo Zegna and Jean
Paul Gaultier. Looking into the future, we must recognize that
general economic conditions are strongly influencing the optical
sector in certain markets in which we operate. These challenges
will requires us to devote additional effort and to develop new
strategies in order to achieve the desired results." De Rigo is one
of the world's largest manufacturers and distributors of premium
eyewear, the leading optical retailer in Spain through General
Optica, one of the leading retailers in the British optical market
through Dollond & Aitchison and a partner of the LVMH Fashion
Group for the manufacture and distribution of Celine, Givenchy and
Loewe eyewear. De Rigo also manufactures and distributes the
licensed brands Chopard, Escada, Ermenegildo Zegna, Etro, Fila,
Furla, Jean Paul Gaultier, La Perla and Mini and its own brands
Police, Sting and Lozza. DE RIGO S.p.A. AND SUBSIDIARIES UNAUDITED
CONSOLIDATED STATEMENTS OF INCOME (In thousands of Euro) For the
twelve months ended December 31, --------- --------- 2004 2003
--------- --------- NET SALES 514,384 504,801 COST OF SALES 198,900
202,040 --------- --------- GROSS PROFIT 315,484 302,761 ---------
--------- COSTS AND EXPENSES Commissions 11,869 13,432 Advertising
and promotion expenses 34,393 32,644 Other selling expenses 204,442
195,532 General and administrative expenses 35,955 36,299 ---------
--------- 286,659 277,907 --------- --------- INCOME FROM
OPERATIONS 28,825 24,854 --------- --------- OTHER (INCOME)
EXPENSES Interest expense 1,126 2,217 Interest income (675) (718)
Other (income) expenses, net 725 (14,483) --------- --------- 1,176
(12,984) --------- --------- INCOME BEFORE INCOME TAXES 27,649
37,838 --------- --------- INCOME TAXES 12,737 14,935 ---------
--------- INCOME BEFORE MINORITY INTEREST 14,912 22,903 MINORITY
INTEREST 434 4,425 --------- --------- NET INCOME 14,478 18,478
--------- --------- --------- --------- DE RIGO S.p.A. AND
SUBSIDIARIES UNAUDITED CONSOLIDATED BALANCE SHEETS (In thousands of
Euro) ------------ ------------ December 31, December 31, 2004 2003
------------ ------------ ASSETS Current assets: Cash and cash
equivalents 27,146 19,634 Accounts receivable, trade, net of
allowances for doubtful accounts 61,271 61,938 Inventories 51,232
49,366 Deferred income taxes 5,443 13,018 Prepaid expenses and
other current assets 14,391 12,393 ------------ ------------ Total
current assets 159,483 156,349 Property, plant and equipment: Land
16,874 16,848 Buildings 54,658 54,587 Machinery and equipment
24,475 25,491 Office furniture and equipment 94,955 82,800
Construction in progress 19 - ------------ ------------ 190,981
179,726 Less: accumulated depreciation (82,805) (70,643)
------------ ------------ Property, plant and equipment, net
108,176 109,083 Goodwill and intangible assets 97,574 103,891
Deferred income taxes 11,927 1,407 Other non current assets 17,404
6,157 ------------ ------------ TOTAL ASSETS 394,564 376,887
------------ ------------ ------------ ------------ DE RIGO S.p.A.
AND SUBSIDIARIES UNAUDITED CONSOLIDATED BALANCE SHEETS (In
thousands of Euro) ------------ ------------ December 31, December
31, 2004 2003 ------------ ------------ LIABILITIES AND
SHAREHOLDERS' EQUITY Current liabilities: Bank borrowings 20,410
22,569 Current portion of long-term debt 184 166 Accounts payable,
trade 70,875 66,141 Commissions payable 212 895 Income taxes
payable 4,219 5,452 Deferred income taxes 767 1,392 Accrued
expenses and other current liabilities 28,970 27,223 ------------
------------ Total current liabilities 125,637 123,838 Termination
indemnities and other employee benefits 10,142 9,755 Deferred
income taxes 9,835 8,670 Long-term debt, less current portion 341
497 Other non current liabilities 7,200 7,243 Shareholder's equity:
Capital stock 11,683 11,626 Additional paid-in capital 54,599
54,490 Retained earnings 175,891 161,413 Foreign currency
translation (5,801) (5,682) Revaluation surplus 5,037 5,037
------------ ------------ Total shareholders' equity 241,409
226,884 ------------ ------------ TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 394,564 376,887 ------------ ------------
------------ ------------ Reconciliation of income from operations
before depreciation and amortization with most directly comparable
Italian GAAP measure (In millions of Euro) ----------------------
De Rigo Group 2004 2003 % Change ---------------------- Income from
operations 28.8 24.9 15.7% Amortization of goodwill 6.3 6.8 -7.4%
Amortization of other intangibles 2.2 2.4 -8.3% Depreciation 18.4
17.7 4.0% ----------- Income from operations before depreciation
and amortization 55.7 51.8 7.5% ---------------------- Wholesale
& Manufacturing 2004 2003 % Change ----------------------
Income from operations 16.2 13.6 19.1% Amortization of goodwill 0.3
0.8 -62.5% Amortization of other intangibles 1.0 1.0 0.0%
Depreciation 3.8 3.0 26.7% ----------- Income from operations
before depreciation and amortization 21.3 18.4 15.8%
---------------------- Retail 2004 2003 % Change
---------------------- Income from operations 12.6 9.6 31.3%
Amortization of goodwill 6.0 6.0 0.0% Amortization of other
intangibles 1.2 1.3 -7.7% Depreciation 14.6 14.3 2.1% -----------
Income from operations before depreciation and amortization 34.4
31.2 10.3% ---------------------- Dollond & Aitchison 2004 2003
% Change ---------------------- Income from operations 1.9 1.2
58.3% Amortization of goodwill 1.6 1.6 0.0% Amortization of other
intangibles 0.3 0.5 -40.0% Depreciation 7.1 6.8 4.4% -----------
Income from operations before depreciation and amortization 10.9
10.1 7.9% ---------------------- General Optica 2004 2003 % Change
---------------------- Income from operations 10.7 8.4 27.4%
Amortization of goodwill 4.4 4.4 0.0% Amortization of other
intangibles 0.9 0.8 12.5% Depreciation 7.5 7.5 0.0% -----------
Income from operations before depreciation and amortization 23.5
21.1 11.4% ----------- EID 2004 2003 ----------- Income from
operations 0.0 1.7 Amortization of goodwill 0.0 0.0 Amortization of
other intangibles 0.0 0.1 Depreciation 0.0 0.4 ----------- Income
from operations before depreciation and amortization 0.0 2.2
Reconciliation of Net Financial Position with most directly
comparable Italian GAAP measure (In millions of Euro)
--------------------------- December 31, December 31, 2004 2003
--------------------------- Cash and cash equivalents 27.1 19.6
Bank Borrowings -20.4 -22.5 Current portion of long term debt -0.2
-0.2 Long term debt, less current portion -0.3 -0.5
--------------------------- Net Financial Position 6.2 -3.6
Reconciliation of consolidated Italian GAAP sales results with
consolidated sales excluding sales made by EID (In millions of
Euro) ----------------------- 2003 2004 Net Net % change Sales
Sales ----------------------- Wholesale & Manufacturing 136.2
134.5 -1.2% Retail 361.5 389.8 +7.8% - D&A 230.8 248.9 +7.8% -
GO 130.7 140.9 +7.8% Elimination of Intercompany Sales -12.7 -9.9
-22.0% ----------------------- Consolidated net sales excluding
sales by EID 485.0 514.4 +6.1% ----------------------- EID 19.8 0.0
----------------------- Consolidated net sales 504.8 514.4 +1.9%
----------------------- Reconciliation of sales of wholesale &
manufacturing business segment with the segment's sales excluding
sales made to EID (In millions of Euro) -----------------------
2003 2004 Net Net % change Sales Sales -----------------------
Wholesale & Manufacturing sales 136.2 134.5 -1.2% - of which
sales to EID -2.6 0.0 ----------------------- Wholesale &
Manufacturing sales excluding sales to EID 133.6 134.5 +0.7%
----------------------- --------------------------------- (1) The
Group reports its results in Euro. On April 13th, 2005, the
official Euro/U.S. Dollar exchange rate, as reported by the
European Central Bank, was EUR 1 = USD 1.2922. The financial
results reported in this press release have not yet been audited by
the Group's independent registered public accountants and are
presented on the basis of accounting principles generally accepted
in Italy ("Italian GAAP"). (2) Reconciliations detailing the
Group's consolidated Italian GAAP sales results and those of its
wholesale & manufacturing business segment excluding sales made
by or to EID are provided on the tables accompanying this release.
(3) The Group believes that the income from operations before
depreciation and amortization and the other non-Italian GAAP data
included in this release, when considered in conjunction with (but
not in lieu of) other measures that are computed in accordance with
Italian GAAP, enhance an understanding of the Group's results of
operations. The Group's management uses income from operations
before depreciation and amortization as one of the bases on which
it analyses the performance of the Group and its segments, as
management generally does not have control over the amortization
periods for goodwill and other intangibles or the related
depreciation amounts. Income from operations before depreciation
and amortization should not, however, be considered in isolation as
a substitute for net income, operating income, cash flow provided
by operating activities or other income or cash flow data prepared
in accordance with generally accepted accounting principles or as a
measure of a company's profitability or liquidity. The Group
calculates income from operations before depreciation and
amortization as being equal to income from operations plus
depreciation and amortization, as detailed in the table
accompanying this release, which also includes a detailed
reconciliation between income from operations before depreciation
and amortization and the other non-Italian GAAP measures used in
this release and the most directly comparable Italian GAAP
measures. (4) In accordance with Italian practice, management uses
net financial position as the primary measure of the Group's debt
position. A detailed reconciliation between the net financial
position and the most directly comparable Italian GAAP measure is
provided in the accompanying table. DATASOURCE: De Rigo S.p.A.
CONTACT: For further information, please contact: Maurizio
Dessolis, Chief Financial Officer, Tel. +39-0437-7777, Fax
+39-0437-770727, e-mail:
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