MARCOLIN BOND REPORT AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2013 1 - PDF document

MARCOLIN BOND REPORT AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2013 1

DISCLAIMER The following information is confidential and does not constitute an offer to sell or a solicitation of an offer to buy any securities of Marcolin S.p.A. or any of its subsidiaries or affiliates. Statements on the following pages which are not historical facts are forward ‐ looking statements. All forward ‐ looking statements involve risks and uncertainties which could affect Marcolin’s actual results and could cause its actual results to differ materially from those expressed in any forward ‐ looking statements made by, or on behalf of, Marcolin. 2

TABLE OF CONTENTS OVERVIEW .......................................................................................................................................................................... 4 ................................................................................................................... 7 PRESENTATION OF FINANCIAL INFORMATION PRO FORMA COMBINED FINANCIAL INFORMATION ........................................................................................................ 12 ...................................................................................... 14 MARCOLIN GROUP SUMMARY CONSOLIDATED INFORMATION ................................................................................................ 19 VIVA GROUP SUMMARY CONSOLIDATED INFORMATION MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF MARCOLIN .......................................................................................................................................................................................... 22 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF VIVA ...... 38 3

Marcolin 2013 Bond Report – Overview OVERVIEW Marcolin is a leading global designer, manufacturer and distributor of branded sunglasses and prescription frames. We believe we are the world’s fourth largest eyewear wholesale player by revenue, with a broad portfolio of 21 licensed brands that appeal to key demographics across five continents. Marcolin manages primarily a licensed brand business, and we design, manufacture (or contract to manufacture) and distribute eyewear primarily bearing the brand names we have obtained pursuant to long ‐ term, exclusive license agreements. We focus on high performing brands with eyewear accessory lines that have international awareness. The Marcolin portfolio includes iconic labels such as Tom Ford, Guess, TOD’S, Montblanc, Diesel, Swarovski, Timberland, Gant, Harley ‐ Davidson and Roberto Cavalli. The long tenure of licenses provide Marcolin with strong revenue visibility. The Group is now present in all leading countries throughout the world through its affiliates, partnerships and exclusive distribution agreements with major players. The Marcolin Group has a strong brand portfolio, with a good balance between luxury brands (high ‐ end products distinguished by their exclusivity and distinctiveness (or consumer perceptions thereof) and often characterized by a higher retail price), and mainstream ("diffusion") products (products influenced by fashion and market trends positioned in the mid ‐ and upper ‐ mid price segments targeting a wider customer base), men's and women's products, and prescription frames and sunglasses. The luxury segment includes glamorous fashion brands such as Tom Ford, Tod’s, Balenciaga, Roberto Cavalli, Montblanc and now Zegna and Agnona, and the diffusion segment includes Diesel, Swarovski, DSquared2, Just Cavalli, Timberland, Cover Girl, Kenneth Cole New York and Kenneth Cole Reaction. The house brands are the traditional "Marcolin" brand as well as National and Web. In December 2013, Marcolin acquired the Viva International group (hereafter also “Viva”) by acquiring 100% of the capital of Viva Optique, Inc. Viva is a leading eyewear wholesale designer and distributor of premium eyewear. Viva’s net sales are concentrated mainly in the diffusion category, and a strong position in prescription frames, which generated approximately 66.5% of its net sales for the year ended December 31, 2013. Combined with Viva, the Marcolin Group now has sales of €345 million and some 1,191 employees (including 295 from the Viva Group), plus a widespread network of proven independent agents. Viva’s products and markets complement those of the Marcolin Group, and as a result, the acquisition of Viva has improved Marcolin's standing as a highly global eyewear company in terms of its brand portfolio, products, geographic presence and markets. The Marcolin Group has a strong brand portfolio, with a good balance between luxury brands (high ‐ end products distinguished by their exclusivity and distinctiveness (or consumer perceptions thereof) and often characterized by a higher retail price), and mainstream ("diffusion") products (products influenced by fashion and market trends positioned in the mid ‐ and upper ‐ mid price segments targeting a wider customer base), men's and women's products, and prescription frames and sunglasses. The luxury segment includes glamorous fashion brands such as Tom Ford, Tod’s, Balenciaga, Roberto Cavalli, Montblanc and now Zegna and Agnona, and the diffusion segment includes Diesel, Swarovski, DSquared2, Just Cavalli, Timberland, Cover Girl, Kenneth Cole New York and Kenneth Cole Reaction. The house brands are the traditional "Marcolin" brand as well as National and Web. The Viva Group has added to this portfolio the brands Guess, Guess by Marciano, Gant, Harley Davidson, and other brands targeted specifically to the U.S. market. The Viva Group, with some 8.5 million eyewear items sold, 300 employees and sales in 2013 of nearly $190 million dollars, with a network of more than 160 agents operating on the American market and a brand portfolio that includes Guess, Guess by Marciano, Gant, Harley Davidson, and other brands targeted specifically to the U.S. "diffusion" market. Along the path of growth pursued by Marcolin, the Viva acquisition has turned the Group into a true global player by expanding its scale, geographical presence, brand portfolio and product range. The diversity of the brands managed, the completion of the "diffusion" product range and the balance achieved between men's and women's products and between eyeglasses and sunglasses are among the strategic factors behind the important acquisition. Moreover, Viva’s strong presence in the overseas market will enable Marcolin, which up to 4