LONGARONE, Italy, September 6 /PRNewswire-FirstCall/ -- De Rigo
(NYSE: DER) today announced its unaudited results for the first six
months of 2005. Notwithstanding a strong improvement in the
profitability of Dollond & Aitchison ("D&A"), the Group's
British retail chain, and in the Group's net financial position, De
Rigo's overall sales and earnings were both down from the same
period last year, primarily due to weaker results from the
wholesale & manufacturing business segment. Highlights of the
Group's unaudited consolidated results for the first six months of
2005 include: - Net sales amounted to EUR 267.5 m (1), a decrease
of 3.0% from the EUR 275.9 m posted in the same period last year. -
Income from operations before depreciation and amortization(2)
amounted to EUR 30.6 m, a decrease of 13.8% from the EUR 35.5 m
posted in the first six months of 2004, and represented 11.4% of
net sales, as compared with 12.9% in the same period last year. -
Income from operations amounted to EUR 18.8 m, a decrease of 17.9%
from the EUR 22.9 m recorded in the first six months of 2004, and
represented 7.0% of net sales, as compared with 8.3% in the same
period last year. - Net income amounted to EUR 10.0 m, a decrease
of 18.7% from the EUR 12.3 m recorded in the first six months of
2004 and represented 3.7% of net sales, as compared with 4.5% in
the same period last year. - At 30th June 2005, the net financial
position (3) of the De Rigo Group was positive and amounted to EUR
14.3 m, as compared with the EUR 6.2 m recorded at 31st December
2004. The improvement in net financial position reflected the
Group's use of cash flow from operating activities to reduce the
level of its bank borrowings. The results posted by the Group in
the first six months of 2005 reflected the contribution of each of
the Company's business segments during the periods under review.
The following table summarizes the principal unaudited results of
each of the Group's business segments for the periods indicated in
millions of EUR: Group's Sales % Income from % Income % Business
Change operations Change from Change Segments before operations
depreciation and amortization 1H 1H 1H 1H 1H 1H 2005 2004 2005 2004
2005 2004 Wholesale & 79.4 82.8 -4.1% 11.0 18.3 -39.9% 9.4 16.3
-42.3% Manufacturing Retail 195.0 198.7 -1.9% 19.6 17.2 +14.0% 9.4
6.6 +42.4% - D&A 120.5 127.3 -5.3% 8.0 5.1 +56.9% 3.8 0.8
+375.0% - GO 74.5 71.4 +4.3% 11.6 12.1 -4.1% 5.6 5.8 -3.4%
Intercompany -6.9 -5.6 +23.2% - - - - Eliminations Total 267.5
275.9 -3.0% 30.6 35.5 -13.8% 18.8 22.9 -17.9% Wholesale &
Manufacturing Sales of the wholesale & manufacturing segment
amounted to EUR 79.4 m, a decrease of 4.1% as compared with EUR
82.8 m posted in the first six months of 2004. Wholesale &
manufacturing sales in the first six months of 2005 continued to be
impacted by the expiry of the Group's license agreement with Fendi
as of the end of 2004. Management expects that the negative impact
on the segment's sales of the expiry of the Fendi license will
eventually be more than offset by increased sales under the new
license agreements De Rigo signed with Chopard, Ermenegildo Zegna,
Escada and Jean Paul Gaultier during the last quarter of 2004 and
first quarter of 2005. However, deliveries of Chopard and
Escada-branded eyewear have only started recently, while those of
Ermenegildo Zegna and Jean Paul Gaultier products have not yet
started. As a result, sales of the new brands contributed less to
the segment's sales during the first six months of 2005 than those
of Fendi-branded eyewear during the first six months of last year.
The segment's results also reflected a significant reduction in
gross margin, primarily due to a higher degree of inventory
obsolescence (largely attributable to higher inventories of slower
moving products) and an increase in selling expenses due to an
enlargement of the segment's sales department. As a result, income
from operations before depreciation and amortization amounted to
EUR 11.0 m, a decrease of 39.9% from the EUR 18.3 m recorded in the
first six months of 2004 and represented 13.9% of sales, as
compared with 22.1% in the same period last year; income from
operations amounted to EUR 9.4 m, a decrease of 42.3% from EUR 16.3
m in the first six months of 2004, and represented 11.8% of sales,
as compared with 19.7% in the same period last year. Retail Sales
of the retail segment amounted to EUR 195.0 m, a decrease of 1.9%
from the EUR 198.7 m posted in the first six months of 2004. The
decrease was primarily attributable to a decline in sales at
D&A, the Group's British retail chain, that reflected a general
downturn in the British optical market in both value and volume
terms. The impact of the sales decline in Great Britain on the
retail segment's overall results was partially offset by a 4.3%
increase in sales at General Optica ("GO"), the Group's Spanish
retail chain, that reflected both the opening of new stores and an
increase in same store sales. Income from operations before
depreciation and amortization and income from operations improved
sharply at the retail segment, primarily due to significant
improvements in D&A's results. Income from operations before
depreciation and amortization for the retail segment as a whole
increased by 14.0% to EUR 19.6 m from the EUR 17.2 m posted in the
first six months of 2004 and represented 10.1% of sales, as
compared with 8.7% in the same period last year. Income from
operations for the segment as a whole increased by 42.4% to EUR 9.4
m from the EUR 6.6 m posted in the first six months of 2004 and
represented 4.8% of sales, as compared with 3.3% in the same period
last year. These results reflect the contribution of the Group's
two retail chains: D&A's sales amounted to EUR 120.5 m, a
decrease of 5.3% as compared with sales of EUR 127.3 m posted in
the first six months of 2004. Sales declined by 2.9% in Pound
Sterling terms, reflecting the decrease of the Pound Sterling's
value against the Euro during the period, while same store sales
per working day decreased by 3.8%. Notwithstanding the weaker sales
results, D&A posted a significant improvement in earnings, as
gross margin increased as a result of an improved mix of products
sold and operating expenses decreased as compared with the same
period last year. Income from operations before depreciation and
amortization increased by 56.9% to EUR 8.0 m from the EUR 5.1 m
posted in the first six months of 2004, and represented 6.6% of
sales, having represented 4.0% in the same period last year. Income
from operations more than quadrupled to EUR 3.8 m from EUR 0.8 m,
and represented 3.2% of sales, having represented 0.6% in the same
period last year. GO grew sales by 4.3% to EUR 74.5 m, from EUR
71.4 m in the first half of 2004. Same store sales per working day
rose by 1.1%, with the overall increase also reflecting GO's
opening of 7 owned and 7 franchised stores during the last 12
months. GO's earnings were negatively affected by higher operating
costs due to the expansion of the company's sales network, which
more than offset the positive impact of the growth in sales. Income
from operations before depreciation and amortization amounted to
EUR 11.6 m, a decrease of 4.1% from the EUR 12.1 m posted in the
first six months of 2004, representing 15.6% of sales, as compared
with 16.9% in the same period last year. Income from operations
amounted to EUR 5.6 m, a decrease of 3.4% from the EUR 5.8 m posted
in the first six months of 2004, representing 7.5% of sales, as
compared with 8.1% in the same period last year. Additional
information on consolidated results - Basic earnings per share
amounted to EUR 0.24, a decrease of 14.3% from the EUR 0.28 posted
in the first six months of 2004. Diluted earnings per share
amounted to EUR 0.24, a decrease of 11.1% from the EUR 0.27 posted
in the first six months of 2004. Following the expiration of the
Group's stock option plan at the end of 2004, basic earnings per
share are equal to diluted earnings per share. - Income taxes
amounted to EUR 8.7 m, as compared with EUR 10.1 m in the first six
months of 2004. The reduction in taxes reflected the Group's lower
earnings, as the Group's income was taxed at an effective rate of
46.4%, as compared with an effective tax rate of 44.3% in the same
period last year. - Capital expenditures amounted to EUR 8.5 m in
the first six months of 2005, as compared with EUR 8.0 m in the
same period last year. The increase was primarily attributable to
higher investments in information technology in the wholesale &
manufacturing business segment. De Rigo is one of the world's
largest manufacturers and distributors of premium eyewear, the
major 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, Etro, Fila, Furla, La Perla and Mini, as well as
its own brands Police, Sting and Lozza. De Rigo will begin
manufacturing eyewear under the Jean Paul Gaultier and Ermenegildo
Zegna licensed brands in the second half of 2005. De Rigo S.p.A.
and Subsidiaries Unaudited Consolidated Statements of Income (In
thousands of Euro) For the six months ended June30, 2005 2004 Net
Sales 267,524 275,886 Cost Of Sales 102,019 105,176 Gross Profit
165,505 170,710 Costs and Expenses Commissions 5,934 6,491
Advertising and promotion expenses 18,222 19,695 Other selling
expenses 103,907 103,387 General and administrative expenses 18,674
18,197 146,737 147,770 Income From Operations 18,768 22,940 Other
(Income) Expenses Interest expense 348 499 Interest income (302)
(280) Other (income) expenses, net (67) 34 (21) 253 Income Before
Income Taxes 18,789 22,687 Income Taxes 8,717 10,056 Income Before
Minority Interest 10,072 12,631 Minority Interest 83 308 Net Income
9,989 12,323 De Rigo S.p.A. and Subsidiaries Unaudited Consolidated
Balance Sheets (In thousands of Euro) June 30, December 31, June
30, 2005 2004 2004 Assets Current assets: Cash and cash equivalents
24,497 27,146 30,488 Accounts receivable, trade, net of allowances
for doubtful accounts 71,667 61,271 76,464 Inventories 50,460
51,232 45,540 Deferred income taxes 7,542 5,443 12,958 Prepaid
expenses and other current assets 17,093 14,391 12,677 Total
current assets 171,259 159,483 178,127 Property, plant and
equipment: Land 17,289 16,874 17,069 Buildings 55,605 54,658 55,485
Machinery and equipment 24,771 24,475 25,974 Office furniture and
equipment 103,642 94,955 89,365 Construction in progress 107 19 -
201,414 190,981 187,893 Less: accumulated depreciation. (89,394)
(82,805) (78,261) Property, plant and equipment, net 112,020
108,176 109,632 Goodwill and intangible assets 95,402 97,574
101,407 Deferred income taxes 11,902 11,927 1,241 Other non current
assets 17,602 17,404 5,908 Total Assets 408,185 394,564 396,315 De
Rigo S.p.A. and Subsidiaries Unaudited Consolidated Balance Sheets
(In thousands of Euro) June 30, December 31, June 30, 2005 2004
2004 Liabilities and Shareholders' Equity Current liabilities: Bank
borrowings 5,597 20,410 13,508 Current portion of long-term debt
711 184 117 Accounts payable, trade 72,142 70,875 70,900
Commissions payable 249 212 1,079 Income taxes payable 12,678 4,219
7,839 Deferred income taxes 544 767 1,122 Accrued expenses and
other currentliabilities 32,346 28,970 33,666 Total current
liabilities 124,267 125,637 128,231 Termination indemnities and
other employee benefits 11,119 10,142 9,942 Deferred income taxes
9,882 9,835 8,452 Long -term debt, less current portion 3,852 341
464 Other non current liabilities 5,735 7,200 8,017 Shareholder's
equity: Capital stock 11,683 11,683 11,626 Additional paid-in
capital 54,599 54,599 54,490 Retained earnings 185,880 175,891
173,376 Foreign currency translation (3,869) (5,801) (3,680)
Revaluation surplus 5,037 5,037 5,037 Total shareholders' equity
253,330 241,409 241,209 Total Liabilities and Shareholders' Equity
408,185 394,564 396,315 Reconciliation of income from operations
before depreciation and amortization with most directly comparable
Italian GAAP measure (In millions of Euro) De Rigo Group 1H 2005 1H
2004 % Change Income from operations 18.8 22.9 -17.9% Amortization
of goodwill 3.1 3.1 0.0% Amortization of other intangibles 1.2 1.1
9.1% Depreciation 7.5 8.4 -10.7% Income from operations before
depreciation and amortization 30.6 35.5 -13.8% Wholesale &
Manufacturing 1H 2005 1H 2004 Income from operations 9.4 16.3
-42.3% Amortization of goodwill 0.1 0.1 0.0% Amortization of other
intangibles 0.7 0.5 40.0% Depreciation 0.8 1.4 -42.9% Income from
operations before depreciation and amortization 11.0 18.3 -39.9%
Retail 1H 2005 1H 2004 Income from operations 9.4 6.6 42.4%
Amortization of goodwill 3.0 3.0 0.0% Amortization of other
intangibles 0.5 0.6 -16.7% Depreciation 6.7 7.0 -4.3% Income from
operations before depreciation and amortization 19.6 17.2 14.0%
Dollond & Aitchison 1H 2005 1H 2004 Income from operations 3.8
0.8 375.0% Amortization of goodwill 0.8 0.8 0.0% Amortization of
other intangibles 0.1 0.2 -50.0% Depreciation 3.3 3.3 0.0% Income
from operations before depreciation and amortization 8.0 5.1 56.9%
General Optica 1H 2005 1H 2004 Income from operations 5.6 5.8 -3.4%
Amortization of goodwill 2.2 2.2 0.0% Amortization of other
intangibles 0.4 0.4 0.0% Depreciation 3.4 3.7 -8.1% Income from
operations before depreciation and amortization 11.6 12.1 -4.1%
Reconciliation of Net Financial Position with most directly
comparable Italian GAAP measure (In millions of Euro) June 30,
December 31, 2005 2004 Cash and cash equivalents 24.5 27.1 Bank
Borrowings -5.6 -20.4 Current portion of long term debt -0.7 -0.2
Long term debt, less current portion -3.9 -0.3 Net Financial
Position 14.3 6.2 (1) The Group reports its results in Euro. On
September 5th, 2005, the official Euro/US Dollar exchange rate, as
reported by the European Central Bank, was EUR 1 = USD 1.2538. The
financial results reported in this press release have not been
audited by the Group's independent public accountants and are
presented on the basis of accounting principles generally accepted
in Italy ("Italian GAAP"). (2) 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. (3) 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 measures is
provided in the accompanying table. DATASOURCE: De Rigo S.p.A.
CONTACT: Maurizio Dessolis, Chief Financial Officer, Tel.
+39-0437-7777, Fax +39-0437-770727, e-mail:
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