Annual Review 2012 - Luxottica

MANAGEMENT REPORT
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31, 2012 and 2011, sales realized through the Prada and Miu Miu brand names together
represented approximately 3.9 percent and 4.0 percent of total sales, respectively.
For the years ended December 31, 2012 and 2011, sales realized through the Dolce &
Gabbana and D&G brand names together represented approximately 2.6 percent and
3.1 percent of total sales, respectively. Accordingly, if we are unable to negotiate and
maintain satisfactory license arrangements with leading designers, our growth prospects
and financial results could materially suffer from a reduction in sales or an increase in
advertising costs and royalty payments to designers.
j) As we operate in a complex international environment, if new laws, regulations or
policies of governmental organizations, or changes to existing ones, occur and cannot
be managed efficiently, the results could have a negative impact on our operations, our
ability to compete or our future financial results
Compliance with U.S. and foreign laws and regulations that apply to our international
operations increases our costs of doing business, including cost of compliance, in
certain jurisdictions, and such costs may rise in the future as a result of changes in these
laws and regulations or in their interpretation or enforcement. We have implemented
policies and procedures designed to facilitate our compliance with these laws and
regulations, but there can be no assurance that our employees, contractors or agents
will not violate such laws and regulations or our policies. Any such violations could
individually, or in the aggregate, materially adversely affect our financial condition or
operating results.
Additionally, our Oakley and Eye Safety Systems (“ESS”) subsidiaries are U.S. government
contractors, and as a result, we must comply with, and are affected by, U.S. laws and
regulations related to our government business. These laws and regulations, including
requirements to obtain applicable governmental approvals, clearances and certain export
licenses, may impose additional costs and risks on our business. We also may become
subject to audits, reviews and investigations of our compliance with these laws and
regulations.
k) If we are unable to protect our proprietary rights, our sales might suffer, and we may
incur significant additional costs to defend such rights
We rely on trade secret, unfair competition, trade dress, trademark, patent and copyright
laws to protect our rights to certain aspects of our products and services, including product
designs, proprietary manufacturing processes and technologies, product research and
concepts and recognized trademarks, all of which we believe are important to the success
of our products and services and our competitive position. However, pending trademark
or patent applications may not in all instances result in the issuance of a registered
trademark or patent, and trademarks or patents granted may not be effective in thwarting
competition or be held valid if subsequently challenged. In addition, the actions we take to
protect our proprietary rights may be inadequate to prevent imitation of our products and
services. Our proprietary information could become known to competitors, and we may
not be able to meaningfully protect our rights to proprietary information. Furthermore,
other companies may independently develop substantially equivalent or better products
or services that do not infringe on our intellectual property rights or could assert rights in,