Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 20-F




(Mark One)o

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE
ACT OF 1934ORý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2010ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934ORo

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934


Commission file number 1-10421

LUXOTTICA GROUP S.p.A. (Exact name of Registrant as specified in its charter)(Translation of Registrant's name into English)REPUBLIC OF ITALY (Jurisdiction of incorporation or organization)VIA C. CANTÙ 2, MILAN 20123, ITALY (Address of principal executive offices)Michael A. Boxer, Esq.
Senior Vice President and General Counsel
Luxottica U.S. Holdings Corp.
44 Harbor Park Drive
Port Washington, NY 11050
Tel: (516) 484-3800
Fax: (516) 484-9010(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)




Securities
registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class

Name of each exchange of which registeredORDINARY SHARES, PAR VALUE
EURO 0.06 PER SHARE*

NEW YORK STOCK EXCHANGEAMERICAN DEPOSITARY
SHARES, EACH REPRESENTING
ONE ORDINARY SHARE

NEW YORK STOCK EXCHANGE


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Table of Contents

Securities
registered or to be registered pursuant to Section 12(g) of the Act.

None.

Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None.

Indicate
the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

ORDINARY SHARES, PAR VALUE EURO 0.06 PER SHARE

466,077,210


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act.YesýNooIf this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934.YesoNoýIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.YesýNooIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).YesoNoo


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a
non-accelerated filer.Large accelerated filerý

Accelerated filero

Non-accelerated fileroIndicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:U.S. GAAPo

International Financial Reporting Standards as issued by the International Accounting Standards Boardý

OtheroIf "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to
follow.Item 17oItem 18oIf this is an annual report, indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).YesoNoý


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PART I



2ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

2ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

2ITEM 3.

KEY INFORMATION

2ITEM 4.

INFORMATION ON THE COMPANY

14ITEM 4A.

UNRESOLVED STAFF COMMENTS

41ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

41ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

61ITEM 7.

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

78ITEM 8.

FINANCIAL INFORMATION

79ITEM 9.

THE OFFER AND LISTING

82ITEM 10.

ADDITIONAL INFORMATION

82ITEM 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

105ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

108PART II



109ITEM 13.

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

109ITEM 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

109ITEM 15.

CONTROLS AND PROCEDURES

109ITEM 16.

[RESERVED]

110ITEM 16A.

AUDIT COMMITTEE FINANCIAL EXPERT

110ITEM 16B.

CODE OF ETHICS

110ITEM 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

110ITEM 16D.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

111ITEM 16E.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

111ITEM 16F.

CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT

113ITEM 16G.

CORPORATE GOVERNANCE

113PART IIIITEM 17.

FINANCIAL STATEMENTS

117ITEM 18.

FINANCIAL STATEMENTS

117ITEM 19.

EXHIBITS

118SIGNATURES



123EXHIBIT INDEX


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FORWARD-LOOKING INFORMATION

Throughout this annual report, management has made certain "forward-looking statements" within the meaning of 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 (the "SEC").
These forward-looking statements are made as of the date hereof and we do not assume any obligation to update them.

Throughout
this annual report, when we use the terms "Luxottica," "Company," "Group," "we," "us" and "our," unless otherwise indicated or the context otherwise requires, we are referring
to Luxottica Group S.p.A. and its consolidated subsidiaries. References to "Luxottica," "Company," "Group," "we," "us" and "our," for periods prior to our acquisition of Oakley, Inc.
("Oakley") on November 14, 2007, are to Luxottica Group S.p.A. and its consolidated subsidiaries, excluding Oakley and its subsidiaries, unless otherwise indicated or the context
otherwise requires. References to "Oakley" for periods prior to the acquisition refer to Oakley and its consolidated subsidiaries, unless otherwise indicated or the context otherwise requires.

TRADEMARKS

Our house brands and designer line prescription frames and sunglasses that are referred to in this annual report, and certain of our other
products, are sold under names that are subject to registered trademarks held by us or, in certain instances, our licensors. These trademarks may not be used by any person without our prior written
consent or the consent of our licensors, as applicable.

PART I

ITEM 1.    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.    OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.    KEY INFORMATION

The following tables set forth selected consolidated financial data for the periods indicated and are qualified by reference to, and
should be read in conjunction with, our consolidated financial statements, the related notes thereto, and Item 5"Operating and Financial Review and Prospects" contained elsewhere
herein. We prepare our financial statements in accordance with International Financial

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Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The selected consolidated income statement data for the years ended December 31, 2010, 2009 and
2008, and the selected consolidated balance sheet data as of December 31, 2010 and 2009, are derived from the audited Consolidated Financial Statements included in Item 18. The selected
consolidated income statement data for the years ended December 31, 2007 and 2006, and the selected consolidated balance sheet data as of December 31, 2008, 2007 and 2006, are derived
from audited consolidated financial statements which are not included in this Form 20-F.

[TABLES
APPEAR ON THE FOLLOWING PAGE]

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(Amounts in thousands of Euro except share data)

2010(3)

2009(4)

2008

2007(2)

2006(3)STATEMENT OF INCOME DATA:Net Sales


5,798,035


5,094,318


5,201,611


4,966,054


4,676,156Cost of Sales


(1,990,205
)

(1,762,591
)

(1,748,628
)

(1,577,664
)

(1,425,603
)Gross Profit


3,807,830


3,331,727


3,452,983


3,388,390


3,250,553OPERATING EXPENSESelling and Advertising


(2,367,979
)

(2,104,362
)

(2,144,989
)

(2,071,667
)

(1,963,539
)General and Administrative


(727,693
)

(656,280
)

(576,355
)

(483,459
)

(518,160
)Total


(3,095,672
)

(2,760,642
)

(2,721,344
)

(2,555,126
)

(2,481,700
)Income from Operations


712,159


571,085


731,639


833,264


768,853OTHER INCOME (EXPENSE)Interest Income


8,494


6,887


13,265


17,087


10,712Interest Expense


(106,987
)

(109,132
)

(123,002
)

(91,738
)

(73,361
)OtherNet


(8,130
)

(4,056
)

(33,531
)

18,529


(18,076
)Other Income (Expenses)Net


(106,623
)

(106,301
)

(143,268
)

(56,122
)

(80,725
)Income Before Provision for Income Taxes


605,535


464,784


588,371


777,142


688,128Provision for Income Taxes


(218,219
)

(159,888
)

(190,499
)

(278,943
)

(244,270
)Net Income from Continuing Operations


387,315


304,896


397,872


498,199


443,858Discontinued Operations


19,944











(6,419
)Net Income


407,258


304,896


397,872


498,199


437,439Of which attributable to:Luxottica Group Stockholders


402,187


299,122


390,167


489,850


428,919Non-controlling Interests


5,072


5,774


7,705


8,349


8,520Net Income


407,258


304,896


397,872


498,199


437,439Weighted Average Shares Outstanding (thousands)Basic


458,711.4


457,270.5


456,563.5


455,184.8


452,898.0Diluted


460,535.4


457,937.8


457,844.3


458,297.3


456,405.6Basic Earnings per Share from Continuing Operations(1)


0.83


0.65


0.85


1.08


0.96Basic Earnings per Share from Discontinued Operations(1)


0.04


0.00


0.00


0.00


(0.01
)Basic Earnings per Share(1)


0.88


0.65


0.85


1.08


0.95Diluted Earnings per Share from Continuing Operations(1)


0.83


0.65


0.85


1.07


0.95Diluted Earnings per Share from Discontinued Operations(1)


0.04


0.00


0.00


0.00


(0.01
)Diluted Earnings per Share(1)


0.87


0.65


0.85


1.07


0.94


(1)Earnings
per Share for each year have been calculated based on the weighted-average number of shares outstanding during the respective years. Each American
Depositary Share, or ADS, represents one ordinary share.(2)We
acquired Oakley in November 2007. Therefore, fiscal year 2007 includes operating results of Oakley for the period from and after November 14,
2007, which was the date of the closing of the Oakley acquisition.


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(3)Results
of Things Remembered, our former specialty retail business, which was sold in 2006, are classified as discontinued operations and are not included
in results from continuing operations.(4)Certain
amounts in prior years have been reclassified to conform to 2010 presentation. For additional detail, refer to our Consolidated Financial Statements
included in Item 18 of this Annual Report.


As of December 31,(Amounts in thousands of Euro except share data)2010

2009(1)

2008(2)

2007(2)

2006(2)BALANCE SHEET DATA:Working Capital(3)


649,236


406,819


179,322


(420,825
)

(102,175
)Total Assets


7,993,579


7,261,294


7,462,454


7,276,866


5,110,086Total Debt(4)


2,632,637


2,568,075


2,798,367


2,728,423


1,319,638Stockholders' Equity


3,256,375


2,737,239


2,445,755


2,452,303


2,180,143Capital Stock


27,964


27,863


27,802


27,757


27,613Number of Shares Adjusted to Reflect Changes in Capital (thousands)


466,077.2


464,386.4


463,368.2


462,623.6


460,216.2


(1)2009
amounts were reclassified to conform with the 2010 presentation.(2)Prior
year amounts were reclassified to conform with the 2010 and 2009 presentation.(3)Working
capital is total current assets minus total current liabilities. See Item 5"Operating and Financial Review and
ProspectsLiquidity and Capital Resources."(4)The
current portion of long-term debt was Euro 197.6 million, Euro 166.3 million, Euro 286.2 million,
Euro 792.6 million and Euro 359.8 million for the years ended December 31, 2010, 2009, 2008, 2007 and 2006, respectively.


Dividends

We are required to pay an annual dividend on our ordinary shares if such dividend has been approved by a majority of our stockholders at the ordinary meeting of
stockholders. Before we may pay any dividends with respect to any fiscal year, we are required, as necessary, to set aside an
amount equal to five percent of our statutory net income for such year in our legal reserve unless and until the reserve, including amounts remaining from prior years, is at least equal to
one-fifth of the nominal value of our then issued share capital. Each year thereafter, such legal reserve requirement remains fulfilled so long as the reserve equals at least
one-fifth of the nominal value of our issued share capital for each such year.

At
our ordinary meeting of stockholders held on April 29, 2010, our stockholders approved the distribution of a cash dividend in the amount of Euro 0.35 per ordinary share
and ADR. The total amount of the dividend paid to stockholders on May 27, 2010 was approximately Euro 160.6 million.

On
February 28, 2011, the Board of Directors of the Company proposed to the stockholders meeting convened on April 28, 2011 the distribution of a gross dividend of
Euro 0.44 per entitled share and ADR.

Future
determinations as to dividends will depend upon, among other things, our earnings, financial position and capital requirements, applicable legal restrictions and such other
factors as the Board of Directors and our stockholders may determine.

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The
table below sets forth the cash dividends declared and paid on each ordinary share in each year indicated.

Cash Dividends per
Ordinary Share(1)(2)(3)

Translated into U.S. $
per Ordinary Share(4)Year(Euro)

(U.S. $)2006


0.290


0.3632007


0.420


0.5642008


0.490


0.7702009


0.220


0.3272010


0.350
(5)

0.428


(1)Cash
dividends per ordinary share are expressed in gross amounts without giving effect to applicable withholding or other deductions for taxes.(2)Each
ADS represents one ordinary share.(3)Our
dividend policy is based upon, among other things, our consolidated net income for each fiscal year, and dividends for a fiscal year are paid in the
immediately following fiscal year. The dividends reported in the table were declared and paid in the fiscal year for which they have been reported in the table.(4)Holders
of ADSs received their dividend denominated in U.S. dollars based on the conversion rate used by our paying agent, Deutsche Bank Trust Company
Americas, as specified in the applicable proxy statement.(5)The
dividend of Euro 0.35 per ordinary share was approved by our Board of Directors on March 1, 2010 and was voted upon and approved by our
stockholders at the ordinary meeting of stockholders held on April 29, 2010.


Exchange Rate Information

The following tables set forth, for each of the periods from 2006 to 2009, certain information regarding the Noon Buying Rate in New York City for cable transfers
in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York, which we refer to as the Noon Buying Rate. For 2010, the information reported in the below table is
based upon the Euro foreign exchange reference rate published by the European Central Bank (the "BCE Rate"), which, starting from 2010, is used by the Company for translating amounts denominated in
currencies other than Euro. The information is expressed in U.S. $ per Euro 1.00:

End of PeriodPeriod

Low

High

Average(1)Year Ended December 31, 2006


1.1860


1.3327


1.2661


1.3197Year Ended December 31, 2007


1.2904


1.4862


1.3705


1.4603Year Ended December 31, 2008


1.2446


1.6010


1.4707


1.3919Year Ended December 31, 2009


1.2547


1.5100


1.3946


1.4332Year Ended December 31, 2010


1.1942


1.4563


1.3207


1.3362


(1)The
average of the Noon Buying Rate or the BCE Rate, as applicable, in effect on the last business day of each month during the period. When the Company
consolidates its profit and loss statement,


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it
translates U.S. dollar denominated amounts into Euro using an average U.S. dollar/Euro exchange rate of each business day during the applicable period.


Month

Low

HighOctober 2010


1.3705


1.4101November 2010


1.2998


1.4244December 2010


1.3064


1.3435January 2011


1.2903


1.3716February 2011


1.3440


1.3834March 2011


1.3773


1.4211


On
April 25, 2011, the BCE Rate was U.S. $1.4584 per Euro 1.00.

Unless
otherwise indicated, all convenience translations included in this annual report of amounts expressed in Euro into U.S. dollars have been made using the exchange rates, as
indicated in the above table, in effect as of the end of the relevant period or date, as appropriate.

In
this annual report, unless otherwise stated or the context otherwise requires, references to "$," "U.S. $," "dollars" or "U.S. dollars" are to United States dollars, references to
"Euro" or "€" are to the Common European Currency, the Euro, references to "GBP" are to the British Pound Sterling, references to "Rs" are to Indian rupees, and references to "AUD" or
"A$" are to Australian dollars.

Risk Factors

Our future operating results and financial condition may be affected by various factors, including those set forth below.

Current economic conditions may adversely impact demand for our products, reduce access to credit and cause our customers and others
with which we do business to suffer financial hardship, all of which could adversely impact our business, results of operations, financial condition and cash flows.

Our operations and performance depend significantly on worldwide economic conditions. Uncertainty about current global economic
conditions poses a risk to our business because consumers and businesses may continue to postpone spending in response to tighter credit markets, unemployment, negative financial news and/or declines
in income or asset values, which could have a material adverse effect on demand for our products and services. Discretionary spending is affected by many factors, including general business
conditions, inflation, interest rates, consumer debt levels, unemployment rates, availability of consumer credit, conditions in the real estate and mortgage markets, currency exchange rates and other
matters that influence consumer confidence. Many of these factors are outside our control. Purchases of discretionary items could decline during periods in which disposable income is lower or prices
have increased in response to rising costs or in periods of actual or perceived unfavorable economic conditions. If this occurs or if unfavorable economic conditions continue to challenge the consumer
environment, our business, results of operations, financial condition and cash flows could be materially adversely affected.

In
the event of renewed financial turmoil affecting the banking system and financial markets, additional consolidation of the financial services industry or significant failure of
financial services institutions, there could be a new or incremental tightening of the credit markets, decreased liquidity and extreme volatility in fixed income, credit, currency and equity markets.
In addition, the credit crisis could continue to have material adverse effects on our business, including the inability of customers of our wholesale distribution business to obtain credit to finance
purchases of our products, restructurings, bankruptcies, liquidations and other unfavorable events for our consumers, customers, vendors, suppliers, logistics providers, other service providers and
the financial institutions that are counterparties to our credit facilities and other derivative transactions. The likelihood that such third parties will be

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unable
to overcome such unfavorable financial difficulties may increase. If the third parties on which we rely for goods and services or our wholesale customers are unable to overcome financial
difficulties resulting from the deterioration of worldwide economic conditions or if the counterparties
to our credit facilities or our derivative transactions do not perform their obligations, our business, results of operations, financial condition and cash flows could be materially adversely
affected.

If we are not successful in completing and integrating strategic acquisitions to expand or complement our business, our future
profitability and growth will be at risk.

As part of our growth strategy, we have made, and may continue to make, strategic business acquisitions to expand or complement our
business. Our acquisition activities, however, can be disrupted by overtures from competitors for the targeted candidates, governmental regulation and rapid developments in our industry. We may face
additional risks and uncertainties following an acquisition, including: (i) difficulty in integrating the newly-acquired business and operations in an efficient and effective manner;
(ii) inability to achieve strategic objectives, cost savings and other benefits from the acquisition; (iii) the lack of success by the acquired business in its markets; (iv) the
loss of key employees of the acquired business; (v) a decrease in the focus of senior management on our operations; (vi) difficulty integrating human resources systems, operating
systems, inventory management systems and assortment planning systems of the acquired business with our systems; (vii) the cultural differences between our organization and that of the acquired
business; and (viii) liabilities that were not known at the time of acquisition or the need to address tax or accounting issues.

If
we fail to timely recognize or address these matters or to devote adequate resources to them, we may fail to achieve our growth strategy or otherwise realize the intended benefits of
any acquisition. Even if we are able to integrate our business operations successfully, the integration may not result in the realization of the full benefits of synergies, cost savings, innovation
and operational efficiencies that may be possible from the integration or in the achievement of such benefits within the forecasted period of time.

If we are unable to successfully introduce new products, our future sales and operating performance will suffer.

The mid- and premium-price categories of the prescription frame and sunglasses markets in which we compete are particularly
vulnerable to changes in fashion trends and consumer preferences. Our historical success is attributable, in part, to our introduction of innovative products which are perceived to represent an
improvement over products otherwise available in the market. Our future success will depend on our continued ability to develop and introduce such innovative products. If we are unable to continue to
do so, our future sales could decline, inventory levels could rise, leading to additional costs for storage and potential write-downs relating to the value of excess inventory, and there could be a
negative impact on production costs since fixed costs would represent a larger portion of total production costs due to the decline in quantities produced, which could materially adversely affect our
results of operations.

If we fail to maintain an efficient distribution network in our highly competitive markets, our business, results of operations and
financial condition could suffer.

The mid- and premium-price categories of the prescription frame and sunglasses markets in which we operate are highly
competitive. We believe that, in addition to successfully introducing new products, responding to changes in the market environment and maintaining superior production capabilities, our ability to
remain competitive is highly dependent on our success in maintaining an efficient distribution network. If we are unable to maintain an efficient distribution network, our sales may decline due to the
inability to timely deliver products to customers and our profitability may decline due to an increase in

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our
per unit distribution costs in the affected regions, which may have a material adverse impact on our business, results of operations and financial condition.

If we are unable to achieve and manage growth, operating margins will be reduced as a result of decreased efficiency of
distribution.

In order to achieve and manage our growth effectively, we are required to increase and streamline production and implement
manufacturing efficiencies where possible, while maintaining strict quality control and the ability to deliver products to our customers in a timely and efficient manner. We must also continuously
develop new product designs and features, expand our information systems and operations, and train and manage an increasing number of management level and other employees. If we are unable to manage
these matters effectively, our distribution process could be adversely affected and we could lose market share in affected regions, which could materially adversely affect our business prospects.

If we do not correctly predict future economic conditions and changes in consumer preferences, our sales of premium products and
profitability will suffer.

The fashion and consumer products industries in which we operate are cyclical. Downturns in general economic conditions or
uncertainties regarding future economic prospects, which affect consumer disposable income, have historically adversely affected consumer spending habits in our principal markets and thus made the
growth in sales and profitability of premium-priced product categories difficult during such downturns. Therefore, future economic downturns or uncertainties could have a material adverse effect on
our business, results of operations and financial condition, including sales of our designer and other premium brands.

The
industry is also subject to rapidly changing consumer preferences and future sales may suffer if the fashion and consumer products industries do not continue to grow or if consumer
preferences shift away from our products. Changes in fashion could also affect the popularity and, therefore, the value of the fashion licenses granted to us by designers. Any event or circumstance
resulting in reduced market acceptance of one or more of these designers could reduce our sales and the value of our models from that designer. Unanticipated shifts in consumer preferences may also
result in excess inventory and underutilized manufacturing capacity. In addition, our success depends, in large part, on our ability to anticipate and react to changing fashion trends in a timely
manner. Any sustained failure to identify and respond to such trends could materially adversely affect our business, results of operations and financial condition and may result in the
write-down of excess inventory and idle manufacturing facilities.

If we do not continue to negotiate and maintain favorable license arrangements, our sales or cost of sales will suffer.

We have entered into license agreements that enable us to manufacture and distribute prescription frames and sunglasses under certain
designer names, includingChanel, Prada, Miu Miu, Dolce & Gabbana, D&G, Bvlgari, Tiffany & Co., Versace, Salvatore Ferragamo, Burberry, Polo Ralph Lauren,
Donna Karan, DKNY, Paul Smith Spectacles, Brooks Brothers, Anne Klein, Stella McCartney, Tory Burch and Coach.These license agreements typically have terms of between three
and ten years and may contain options for renewal for additional periods and require us to make guaranteed and contingent royalty payments to the licensor. We believe that our ability to maintain and
negotiate favorable license agreements with leading designers in the fashion and luxury goods industries is essential to the branding of our products and, therefore, material to the success of our
business. For the years ended December 31, 2010 and 2009, the sales realized through thePradaandMiu
Miubrand names together represented approximately 4.2 percent and 4.7 percent of total sales, respectively. For the years ended December 31, 2010 and
2009, the sales realized through theDolce & GabbanaandD&Gbrand names
together represented
approximately 3.5 percent and 4.0 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.

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If vision correction alternatives to prescription eyeglasses become more widely available, or consumer preferences for such
alternatives increase, our profitability could suffer through a reduction of sales of our prescription eyewear products, including lenses and accessories.

Our business could be negatively impacted by the availability and acceptance of vision correction alternatives to prescription
eyeglasses, such as contact lenses and refractive optical surgery. According to industry estimates, over 39 million people wear contact lenses in the United States, and the disposable contact
lens market is the fastest growing segment of the lens subsector. In addition, the use of refractive optical surgery has grown substantially in the United States since it was approved by the U.S. Food
and Drug Administration in 1995.

Increased
use of vision correction alternatives could result in decreased use of our prescription eyewear products, including a reduction of sales of lenses and accessories sold in our
retail outlets,
which could have a material adverse impact on our business, results of operations, financial condition and prospects.

If the Euro or the Chinese Yuan strengthens relative to certain other currencies or if the U.S. dollar weakens relative to the Euro,
our profitability as a consolidated group will suffer.

Our principal manufacturing facilities are located in Italy. We also maintain manufacturing facilities in China, India and the United
States as well as sales and distribution facilities throughout the world. As a result, our results of operations could be materially adversely affected by foreign exchange rate fluctuations in two
principal areas:



As
our international operations grow, future changes in the exchange rate of the Euro against the U.S. dollar and other currencies may negatively impact our reported results, although we
have in place policies designed to manage such risk.

See
Item 11"Quantitative and Qualitative Disclosures about Market Risk."

If our business suffers due to changing local conditions, our profitability and future growth will be affected.

We currently operate worldwide and have begun to expand our operations in many countries, including certain developing countries in
Asia, South America and Africa. Therefore, we are subject to various risks inherent in conducting business internationally, including the following:



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The
likelihood of such occurrences and their potential effect on us vary from country to country and are unpredictable, but any such occurrence may result in the loss of sales or
increased costs of doing business and may have a material adverse effect on our business, results of operations, financial condition and prospects.

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,
as a U.S. government contractor through our Oakley and Eye Safety Systems subsidiaries, 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. See Item 4"Information on the
CompanyRegulatory Matters" and Item 8"Financial InformationLegal Proceedings."

If we are unable to protect our proprietary rights, our sales might suffer, and we may incur significant 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, and ownership of, our proprietary rights. Moreover, the laws of certain countries do not protect proprietary rights to the same extent as the laws of the United
States or of the member states of the European Union.

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Consistent
with our strategy of vigorously defending our intellectual property rights, we devote substantial resources to the enforcement of patents issued and trademarks granted to us,
to the protection of our trade secrets or other intellectual property rights and to the determination of the scope or validity of the proprietary rights of others that might be asserted against us.
However, if
the level of potentially infringing activities by others were to increase substantially, we might have to significantly increase the resources we devote to protecting our rights. From time to time,
third parties may assert patent, copyright, trademark or similar rights against intellectual property that is important to our business. The resolution or compromise of any litigation or other legal
process to enforce such alleged third party rights, regardless of its merit or resolution, could be costly and divert the efforts and attention of our management. We may not prevail in any such
litigation or other legal process or we may compromise or settle such claims because of the complex technical issues and inherent uncertainties in intellectual property disputes and the significant
expense in defending such claims. An adverse determination in any dispute involving our proprietary rights could, among other things, (i) require us to grant licenses to, or obtain licenses
from, third parties, (ii) prevent us from manufacturing or selling our products, (iii) require us to discontinue the use of a particular patent, trademark, copyright or trade secret or
(iv) subject us to substantial liability. Any of these possibilities could have a material adverse effect on our business including by reducing our future sales or causing us to incur
significant costs to defend our rights.

If we are unable to maintain our current operating relationship with host stores of our Licensed Brands division, we could suffer a
loss in sales and possible impairment of certain intangible assets.

Our sales depend in part on our relationships with the host stores that allow us to operate our Licensed Brands division, including
Sears Optical and Target Optical. Our leases and licenses with Sears Optical are terminable upon short notice. If our relationship with Sears Optical or Target Optical were to end, we would suffer a
loss of sales and the possible impairment of certain intangible assets. This could have a material adverse effect on our business, results of operations, financial condition and prospects.

If we were to become subject to adverse judgments or determinations in legal proceedings to which we are, or may become, a party, our
future profitability could suffer through a reduction of sales or increased costs.

We are currently a party to certain legal proceedings as described in Item 8"Financial
InformationLegal Proceedings." In addition, in the ordinary course of our business, we become involved in various other claims, lawsuits, investigations and governmental and
administrative proceedings, some of which are or may be significant. Adverse judgments or determinations in one or more of these proceedings could require us to change the way we do business or use
substantial resources in adhering to the settlements and could have a material adverse effect on our business, including, among other consequences, by significantly increasing the costs required to
operate our business.

Leonardo Del Vecchio, our chairman and principal stockholder, controls 66.98 percent of our voting power and is in a position to
affect our ongoing operations, corporate transactions and any matters submitted to a vote of our stockholders, including the election of directors and a change in corporate control.

As of April 15, 2011, Mr. Leonardo Del Vecchio, the Chairman of our Board of Directors, through the company Delfin
S.à r.l., has voting rights over 312,653,339 Ordinary Shares, or 66.98 percent of the outstanding Ordinary Shares. See Item 7"Major Shareholders and
Related Party Transactions." As a result, Mr. Del Vecchio has the ability to exert significant influence over our corporate affairs and to control the outcome of virtually all matters submitted
to a vote of our stockholders, including the election

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of
our directors, the amendment of our Articles of Association or By-laws, and the approval of mergers, consolidations and other significant corporate transactions.

Mr. Del
Vecchio's interests may conflict with or differ from the interests of our other stockholders. In situations involving a conflict of interest between Mr. Del Vecchio
and our other stockholders, Mr. Del Vecchio may exercise his control in a manner that would benefit himself to the potential detriment of other stockholders. Mr. Del Vecchio's
significant ownership interest could delay, prevent or cause a change in control of our company, any of which may be adverse to the interests of our other stockholders.

If our procedures designed to comply with Section 404 of the Sarbanes-Oxley Act of 2002 cause us to identify material weaknesses
in our internal control over financial reporting, the trading price of our securities may be adversely impacted.

Our annual report on Form 20-F includes a report from our management relating to its evaluation of our internal
control over financial reporting, as required under Section 404 of the U.S. Sarbanes-Oxley Act of 2002, as amended. There are inherent limitations on the effectiveness of internal controls,
including collusion, management override and failure of human judgment. In addition, control procedures are designed to reduce, rather than eliminate, business risks. As a consequence of the systems
and procedures we have implemented to comply with these requirements, we may uncover circumstances that we determine, with the assistance of our independent auditors, to be material weaknesses, or
that otherwise result in disclosable conditions. Any identified material weaknesses in our internal control structure may involve significant effort and expense to remediate, and any disclosure of
such material weaknesses or other disclosable conditions may result in a negative market reaction to our securities.

We rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that
technology could harm our ability to effectively operate our business.

We rely on information technology systems across our operations, including for management of our supply chain,
point-of-sale processing in our stores and various other processes and transactions. Our ability to effectively manage our business and coordinate the production, distribution
and sale of our products depends on, among other things, the reliability and capacity of these systems. The failure of these systems to operate effectively, network disruptions, problems with
transitioning to upgraded or replacement systems, or a breach in data security of these systems could cause delays in product supply and sales, reduced efficiency of our operations, unintentional
disclosure of customer or other confidential information of the Company, or damage to our reputation, and potentially significant capital investments could be required to remediate the problem, which
could have a material adverse effect on our results of operations.

If we record a write-down for inventories or other assets that are obsolete or exceed anticipated demand or net realizable
value, such charges could have a material adverse effect on our results of operations.

We record a write-down for product and component inventories that have become obsolete or exceed anticipated demand or net
realizable value. We review our long-lived assets for impairment whenever events or changed circumstances indicate that the carrying amount of an asset may not be recoverable, and we
determine whether valuation allowances are needed against other assets, including, but not limited to, accounts receivable. If we determine that impairments or other events have occurred that lead us
to believe we will not fully realize these assets, we record a write-down or a valuation allowance equal to the amount by which the carrying value of the assets exceeds their fair market
value. Although we believe our inventory and other asset-related provisions are currently adequate, no assurance can be made that, given the rapid and unpredictable pace of product

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obsolescence
for fashion eyewear, we will not incur additional inventory or asset-related charges, which charges could have a material adverse effect on our results of operations.

We are exposed to credit risk on our accounts receivable. This risk is heightened during periods when economic conditions
worsen.

A substantial majority of our outstanding trade receivables are not covered by collateral or credit insurance. While we have procedures
to monitor and limit exposure to credit risk on our trade and non-trade receivables, there can be no assurance such procedures will effectively limit our credit risk and avoid losses,
which could have a material adverse effect on our results of operations.

Unforeseen or catastrophic losses not covered by insurance could materially adversely affect our results of operations and financial
condition.

For certain risks, we do not maintain insurance coverage because of cost and/or availability. Because we retain some portion of our
insurable risks, and in some cases self-insure completely, unforeseen or catastrophic losses in excess of insured limits could materially adversely affect our results of operations and
financial condition.

Changes in our tax rates or exposure to additional tax liabilities could affect our future results.

We are subject to taxes in Italy, the United States and numerous other foreign jurisdictions. Our future effective tax rates could be
affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their
interpretation. Any of these changes could have a material adverse effect on our profitability. We also are regularly subject to the examination of our income tax returns by the U.S. Internal Revenue
Service as well as the governing tax authorities in other countries where we operate. We routinely assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy
of our provision for taxes. Currently, some of our companies are under examination by the tax authorities in the United States, Italy and other jurisdictions. There can be no assurance that the
outcomes of the current ongoing examinations and possible future examinations will not materially adversely affect our business, results of operations, financial condition and prospects.

ITEM 4.    INFORMATION ON THE COMPANY

OVERVIEW

We are a market leader in premium, luxury and sport/performance eyewear, with net sales reaching Euro 5.8 billion in 2010, over 60,000 employees and
a strong global presence. We operate in two industry segments: (i) manufacturing and wholesale distribution; and (ii) retail distribution. See Item 18"Financial
Statements" 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 house and designer lines of mid- to premium-priced prescription frames and sunglasses, and, through Oakley, of performance optics products. We operate our retail segment
principally through our retail brands, which include, among others, LensCrafters, Sunglass Hut, Pearle Vision, ILORI, The Optical Shop of Aspen, OPSM, Laubman & Pank, Budget Eyewear, Bright
Eyes, Oakley "O" Stores and Vaults, David Clulow and our Licensed Brands (Sears Optical and Target Optical).

Founded
in 1961 by Leonardo Del Vecchio, we are now a vertically integrated organization. Our manufacturing of prescription and sun frames and lenses is backed by
wide-reaching wholesale and retail distribution networks comprising 6,350 retail locations as of December 31, 2010, mostly in North America, Asia-Pacific and China.

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Product
design, development and manufacturing takes place in six production facilities in Italy, two wholly owned factories in China and two sports sunglasses production facilities in
the United States. Luxottica also has a small plant in India serving the local market. In 2010, we produced approximately 56.6 million units.

The
design and quality of our products and our strong and well-balanced brand portfolio are known around the world. Our house brands include Ray-Ban, one of the
world's best-known sun brands, Oakley, Vogue, Persol, Oliver Peoples, Arnette and REVO, and our licensed designer brands include Bvlgari, Burberry, Chanel, Dolce & Gabbana, Donna
Karan, Paul Smith, Polo Ralph Lauren, Prada, Stella McCartney, Tiffany, Tory Burch and Versace.

Our
wholesale distribution network, covering 130 countries across five continents, has 18 logistics centers and 42 commercial subsidiaries providing direct operations in key markets. We
are currently seeking to penetrate emerging markets and are exploring new channels of distribution, such as shopping centers, airports and railway stations, in the geographic markets that we currently
serve.

Our
direct wholesale operations are complemented by an extensive retail network. We are a leader in the prescription business in North America with our LensCrafters and Pearle Vision
brands, in Asia-Pacific with our OPSM, Laubman & Pank and Budget Eyewear brands, and in China with our LensCrafters brand. In our retail sun business, we operate over 2,480 retail
locations in North America, Asia-Pacific, South Africa, Europe and the Middle East, mainly through the Sunglass Hut brand. In addition, we maintain a global sun and luxury retail
management group to support the Sunglass Hut, ILORI, The Optical Shop of Aspen and Bright Eyes brands and reinforce our global retail brands dedicated to sun and luxury eyewear.

In
North America, we operate the points of sale for our Licensed Brands, with over 1,140 stores under the Sears Optical and Target Optical brands. In addition, we are one of the largest
managed vision care operators in the United States, through EyeMed, and the second biggest lens finisher, having a network of five central laboratories and over 900 on-site labs at
LensCrafters stores.

In
2010, we distributed approximately 20.4 million prescription frames and approximately 38.4 million sunglasses, in approximately 5,900 different styles.

Our
Oakley brand provides a powerful wholesale and retail ("O Stores") presence in both the performance optics and the sport channels. In our O Store locations, we offer a variety of
Oakley-branded products in addition to our Oakley sunglass styles. Our Oakley-branded products include men's and women's apparel, footwear, backpacks and accessories designed for surf, snow, golf,
outdoor, motor sport, mountain bike and other athletic lifestyles.

Our
capital expenditures for our continuing operations were Euro 230.4 million for the year ended December 31, 2010 and Euro 57.9 million for the
three-month period ended March 31, 2011. We expect 2011 aggregate capital expenditures to be approximately Euro 280 million, excluding any additional investments for business
acquisitions. The most significant investments planned are the remodeling of existing stores for our North American retail operations and a new IT infrastructure worldwide. We expect to fund this
future capital expenditure with our current available borrowing capacity and available cash. For a description of capital expenditures for the previous three years, see
Item 5"Operating and Financial Review and ProspectsLiquidity and Capital ResourcesCash FlowsInvesting Activities."

Our
principal executive offices are located at Via C. Cantù 2, Milan, 20123, Italy, and our telephone number at that address is
(011) 39-02-863341. We are domiciled in Milan, Italy.

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HISTORY

Incorporation

Luxottica Group was founded by Leonardo Del Vecchio in 1961, when he set up Luxottica di Del Vecchio e C. S.a.S., which subsequently became a joint-stock company
organized under the laws of Italy under the name of Luxottica S.p.A. We started out as a small workshop and operated until the end of the 1960s as a contract producer of dyes, metal components
and semi-finished goods for the optical industry. We gradually widened the range of processes that we offered until we had an integrated manufacturing structure capable of producing a
finished pair of glasses. In 1971, our first collection of prescription eyewear was presented at Milan's MIDO (an international optics trade fair), marking our definitive transition from contract
manufacturer to independent producer.

Expansion in Wholesale Distribution

In the early 1970s, we sold our frames exclusively through wholesalers. In 1974, after five years of sustained development of our manufacturing capacity, we
started to pursue a strategy of vertical integration, with the goal of distributing frames directly to the market. Our first step was the acquisition of Scarrone S.p.A., which had marketed our
products since 1971, and which brought with it vital knowledge of the Italian market.

Our
international expansion began in the 1980s with the acquisition of independent distributors, the opening of branches and the forming of joint ventures in key international markets.

Our
acquisition in 1981 of La Meccanoptica Leonardo, the owner of the Sferoflex brand and an important flexible hinge patent, enabled us to enhance the image and quality of our products
and increase our market share.

From
the late 1980s, eyeglasses, previously perceived as mere sight-correcting instruments, began to evolve into "eyewear." Continual aesthetic focus on everyday objects and interest on
the part of designers in the emerging accessories industry led us, in 1988, to embark on our first collaboration with the fashion industry by entering into a licensing agreement with Giorgio Armani.
We followed up that initial collaboration (the Armani license was terminated in 2003) with numerous others, gradually building our current world-class brand portfolio with the launch of collections
from names like Bvlgari (1997), Chanel (1999), Prada (2003), Versace (2003), Donna Karan (2005), Dolce & Gabbana (2006), Burberry (2006), Polo Ralph Lauren (2007), Tiffany (2008), Stella
McCartney (2009) and Tory Burch (2009).

As
for our house brands, we expanded in the sun business by buying Vogue (1990), Persol (1995), Ray-Ban (1999) and Oakley (2007).

Financial Markets

In 1990, we listed our American Depositary Shares ("ADSs") on the New York Stock Exchange. In 2000, our stock was listed on Borsa Italiana's electronic share
market and it has been in Italy's Mercato Telematico Azionario (MTA) since 2003.

Retail Distribution

In 1995, we acquired The United States Shoe Corporation, which owned LensCrafters, one of North America's largest optical retail chains. As a result, we became
the world's first significant eyewear manufacturer to enter the retail market, thereby maximizing synergies with our production and wholesale distribution and increasing penetration of our products
through LensCrafters stores.

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Ray-Ban

In 1999, we acquired Ray-Ban, one of the world's best-known sunglass brands. Through this acquisition, we obtained crystal sunglass lens
technology and the associated manufacturing capacity and upgraded our portfolio with brands like Arnette, REVO and Killer Loop.

A Decade of Growth

Since 2000, we have strengthened our retail business by acquiring a number of chains, including Sunglass Hut (2001), a leading retailer of premium sunglasses,
OPSM Group (2003), a leading optical retailer in Australia and New Zealand, and Cole National (2004), which brought with it another leading optical retail chain in North America, Pearle Vision, and an
extensive Licensed Brands store business. In 2005, we began our retail expansion into China, where LensCrafters has since become a leading brand in China's high-end market. In 2006, we
started to expand Sunglass Hut globally in high-potential markets like the Middle East, South Africa, Thailand, India and the Philippines.

During
this time, our wholesale segment has supported our new licensing agreements with an increasing commitment to research, innovation, product quality and manufacturing excellence,
while continuing to focus our distribution expansion on customer differentiation and emerging sales channels, such as large department stores and travel retail.

Oakley

In 2007, we acquired California-based Oakley, a leading sports and performance brand, for U.S.$2.1 billion. Oakley, a brand known and appreciated
worldwide, owns the Oliver Peoples brand and a license to manufacture and distribute the Paul Smith brand, as well as its own retail network of over 160 stores.

RECENT DEVELOPMENTS

On January 20, 2011, the Company terminated the revolving credit line with Banca Nazionale del Lavoro totalling Euro 150 million. The
original maturity date of the credit line was July 13, 2011. As of December 31, 2010, the credit line was undrawn.

On
February 17, 2011, we entered into agreements pursuant to which we will acquire Stanza and High Tech, two sunglass specialty retail chains totaling more than 70 stores in
Mexico.

DESIGN AND PRODUCT DEVELOPMENT

Our success depends on, among other things, product design and the continuous development of new styles. In 2010, we added approximately 1,800 new styles to our
eyewear collections.

The
design of the Group's products is at the focal point where vision, technology and creativity converge.

Our
in-house designers oversee the entire concept phase of the creative process, culminating in the creation of the model. At the initial phase, the prototype makers
transform designs into one-off pieces, crafted by hand with precision.

Once
the prototypes or style concepts are developed in the initial phase of design, they are passed on to the product department, which uses 3D software to analyze the steps necessary to
bring the prototype to mass production.

Three
main manufacturing technologies are involved: metal, acetate slabs and plastic (injection molding).

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At
this point in the cycle, the tooling shop puts together equipment needed to make the components for the new model. The first specimens obtained are assembled and undergo a series of
tests required by internal quality control procedures.

The
next steps are production and quality certification of sales samples of the new models. These samples are subjected to a sequence of tests to ascertain the quality of what has been
engineered so far.

The
final step is the production of an initial significant batch using definitive tooling certified by an external standards organization, which is produced in a pilot facility
accurately representing the plant chosen to mass produce the new model to meet the needs of production planning.

For
our designer line products, our design team works with licensors to discuss the basic themes and fashion concepts for each product and then works closely with each licensor's
designers to refine such themes. In addition, our design team works directly with our marketing and sales departments, which monitor demand for our current models as well as general style trends in
eyewear. The information obtained from our marketing and sales departments is then used to refine existing product designs and market positioning in order to react to changing consumer preferences.

BRAND PORTFOLIO

Our brand portfolio is one of the largest in the industry, with our major global brands backed by leading brands both at a regional level and in particular
segments and niche markets. Our portfolio is balanced between house and licensed brands, combining the stability of the former with the prestige of the latter.

The
presence of Ray-Ban, one of the world's best-selling brands of sun and prescription eyewear, and Oakley, a leader in the sport/performance category, gives the
portfolio a strong base, complemented by Persol and Oliver Peoples in the high end of the market, Arnette and REVO in the sports market, and Vogue, in the fashion market.

Alongside
the house brands, which accounted for over 70 percent of all units sold in 2010, our portfolio has over 20 licensed designer brands, including some
well-known and prestigious names in the global fashion and luxury industries. With our manufacturing know-how, capillary distribution and direct retail operations supported by
targeted advertising and our experience in international markets, our goal is to be the ideal partner for fashion houses and stylists seeking to translate their style and values into successful
premium
quality eyewear collections. We differentiate each designer's offering as much as possible, segmenting it by type of customer and geographical market, to produce a broad range of models capable of
satisfying diverse tastes and tendencies and to respond to the demands and characteristics of widely differing markets.

During
the first half of 2010, we renewed our license agreement with Jones Apparel Group for the design, production and global distribution of prescription frames and sunglasses under
the Anne Klein New York brand and with Retail Brand Alliance, Inc. for the design, production and global distribution of prescription frames and sunglasses under the Brooks Brothers brand,
extending the licenses through 2012 and 2014, respectively. In addition, we renewed our partnership with Bvlgari S.p.A. ("Bvlgari"), one of our oldest licenses dating back to 1997, extending
the license for an additional ten years, from 2010 to 2020.

In
2010, we announced the signing of a license agreement with Coach, Inc. ("Coach") for the design, manufacturing and global distribution of sun and prescription eyewear under the
Coach, Coach Poppy and Reed Krakoff brands. Beginning January 2012, distribution of Coach eyewear collections will be through Coach stores across the world, through select department stores primarily
in North America, Japan, China and East Asia, as well as through select travel retail locations, independent optical locations and our retail chains.

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The following table presents the respective percentages of our consolidated total unit (a "unit" represents an eyeglass frame or pair of sunglasses and excludes
sales of other materials) sales comprised by our designer and house brands during the periods indicated:

Year Ended December 31,(As a percentage of total unit sales)

2010

2009

2008

2007

2006Designer brands


26.5


28.3


33.0


42.7


41.2House brands


73.5


71.7


67.0


57.3


58.8


The
following table presents the respective percentages of our total sales comprised by our prescription frames and lenses and sunglasses for the periods indicated:

Year Ended December 31,(As a percentage of total sales of frames and lenses)

2010

2009

2008

2007

2006Prescription frames and lenses


50.2


51.5


52.8


57.7


60.7Sunglasses


49.8


48.5


47.2


42.3


39.3


House Brands

In 2010, we developed approximately 500 distinct new styles within our house brands, of which approximately 290 are prescription frames and
210 are sunglasses. Each style is typically produced in two sizes and five colors.



Style, tradition and freedom of expression are the key values underpinning the philosophy of Ray-Ban, a leader in sun and
prescription eyewear for generations. Debuting in 1937 with the Aviator model created for American Air Force pilots, Ray-Ban joined Luxottica's brand portfolio in 1999.
Ray-Ban is recognized for the quality and authenticity of its eyewear and is worn by celebrities all over the world.



Acquired by Luxottica in 2007, Oakley is a leading sports eyewear brand, known for its blend of technology, design and art across all
its products. In addition to its sun and prescription eyewear and ski goggles, it offers branded apparel, footwear and accessories in collections addressing specific consumer categories: Sport/Active,
Lifestyle and Women. Oakley is also well-known for its lens technologies and especially its High Definition Optics® (HDO®).



Launched in California in 1992, Arnette was acquired by us in 1999, and combines the comfort and functionality demanded
by extreme sports enthusiasts.



Persol, the iconic "Made in Italy" eyewear brand, made its debut in 1917 and was acquired by Luxottica in 1995. With its
evocative name, meaning "for sun", it is the proud heir to a culture of excellence and craftsmanship, a perfect alchemy of aesthetics and technology. The irresistible appeal of timeless design and
high quality make the brand a favorite among celebrities.

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Created in 1985 and acquired by us in 1999, REVO is characterized by an innovative lens based on a technology that NASA
developed for satellite portholes, offering maximum protection against ultraviolet and infrared light.



Launched in 1973 under the same name as the famous fashion magazine, the Vogue brand was acquired by us in 1990. Vogue models
distinguish themselves through their fashionable designs, their variety of colors and frames and the detailing on the temples.



Acquired by Luxottica in 2007, Oliver Peoples began in 1987 with the introduction of a retro-inspired eyewear collection
created by designer and optician Larry Leight. All eyewear is handcrafted from the finest quality materials, in colors exclusive to Oliver Peoples. Frames are manufactured in limited quantities and
with deliberate anti-logo labeling so that only people "in the know" will recognize them.



Created in 1989, Killer Loop joined our brand portfolio in 1999. It gradually evolved from a general sports style to
embody a more "urban" spirit. In 2008 it took on a new name, K&L, and launched a project for collections specifically addressing the preferences of consumers in emerging markets while
maintaining global distribution.



Launched in 1967, our original line best conveys the experience and tradition that are its essence. The brand broadened its range with
Luxottica Titanium, a collection for people who prefer super-lightweight frames of elegant design.



Launched in 2005 and part of our brand portfolio since 2007, Mosley Tribes combines design and aesthetics with a vision of the urban
lifestyle and sports performance worlds. The sleek and stylish frames use titanium and injected plastic for a lightweight design, ideal for active individuals. Most frames feature advanced lens
technology.



Sferoflex, which joined our portfolio in 1981, takes its name from the patented flexible hinge enabling the temples to conform
to the shape and size of the face, thus increasing the resilience of the frame itself and ensuring perfect fit.



Acquired by us in 2007,ESSdesigns, develops and markets advanced eye protection
systems for military, firefighting and law enforcement professionals and is a leading supplier of protective eyewear to the U.S. military and firefighting markets.

Licensed Brands

Our designer lines are produced and distributed through license agreements with major fashion houses. The license agreements are exclusive contracts and typically
have terms of between three and

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ten
years. See "License Agreements." Designer collections are developed through the collaborative efforts of our in-house design staff and the brand designers. Our designer
lines presently feature approximately 900 different styles.



This product line targets successful professional women who place an emphasis on quality and image. The original license was entered
into in 1996.



Characterized by lightweight materials and a slender line, the Brooks Brothers collections reflect the iconic features of the style of
this American brand. This is an affordable product line with classic style that delivers functionality, lightness and high quality. We entered into the original license agreement in 1992.



Extending its vision of extraordinary beauty to everyday objects, Bvlgari, under license since 1997, applies the same uncompromising
design and product standards to its men's and women's eyewear collection, recapturing fine handcrafting in ladies collections and technical innovation in gentlemen styles.



Since its founding in England in 1856, Burberry has been synonymous with quality, as defined by the endurance, classicism and
functionality that characterized its history. Burberry has become a leading luxury brand with a global business. The eyewear collection, under license since 2006, is inspired by the brand's innovative
ready-to-wear and accessories collections and incorporates very recognizable iconic elements for both men and women.



In 1999, Luxottica was the first company licensed to produce Chanel eyewear products. The Chanel product line, targeting
luxury-oriented consumers, reflects the essential characteristics of the brand: style, elegance and class.



Dolce & Gabbana is a luxury brand that owes its incomparable appeal to superior quality and stylistic originality.
Dolce & Gabbana is the new "Made in Italy", whose essence lies in its contrasting yet complementary features. The eyewear collection, under license since 2006, is characterized by modern,
unconventional shapes, prestigious materials and sumptuous detailing.



D&G is an eclectic and contemporary brand, the expression of the metropolitan culture. The eyewear collection, under license since
2006, emphasizes the spirit of the brand through innovative and cosmopolitan shapes and details.



Under license since 2005, this product line reflects the design sensibility and spirit of the Donna Karan collection. The collection,
designed "for a woman by a woman", offers sophisticated styling, sensuality and comfort in a modern way with identifiable detailing and quality workmanship.

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DKNY is easy-to-wear fashion with an urban mindset, the energy of New York City and its street-smart look. DKNY
eyewear caters to modern, urban, fashion-conscious women and men, addressing a broad range of lifestyle needs, from work to weekend, jeans to evening. The license was entered into in 2005.



Fox Eyewear collections are the result of a multi-year licensing agreement with Fox Head, Inc., a leading motocross
and action sport brand based in
California. Fox eyewear and ski goggles have been on the market for over five years and are currently the only brand other than Oakley to use High Definition Optics®
(HDO®) technology. Fox Eyewear joined Luxottica's brand portfolio at the end of 2007.



Under license since 2003, Miu Miu is Miuccia Prada's other soul: a brand with a very strong and autonomous identity, characterized by
an avant-garde, sensual, sometimes provocative, style aimed at a trendsetting woman with a strong and independent personality.



The Paul Smith Spectacles brand, which launched in 1994, includes prescription and sun eyewear featuring the whimsical yet
classic designs and attention to detail that are synonymous with one of Britain's leading fashion designers.



Under license since 2007, the Polo Ralph Lauren brand is comprised of the following collections:



The Prada license agreement was signed in 2003. Prada represents the best of Italian culture and tradition. At the same time, Prada is
one of the most innovative fashion brands with a keen attention to detail and new trends: the Prada Eyewear Collection reflects this approach with unmistakable style, sophisticated elegance and
uncompromising quality.

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Under license since 1998, Salvatore Ferragamo collections are characterized by lavish attention to detail, original use of materials
and creative choice of colors. The eyewear collection is inspired by the tradition of craftsmanship of this fashion house, reinterpreted in a contemporary way.



Stella McCartney, under license since 2009, is a design lifestyle brand, synonymous with modern cool. The sunglasses collection appeals
to women who are naturally sexy
and confident, combining everyday quality with sophistication and masculinity with feminine allure and allowing its wearers to create their own distinctive look.



Founded in 1837 in New York City, Tiffany has a rich heritage filled with celebrated events, artists and milestones that live on today
in legendary style. The Eyewear Collection, signed for the first time with Luxottica Group, takes inspiration from the most iconic jewelry collection, celebrating stunning originality and enduring
beauty.



Under license since 2009, Tory Burch is an attainable luxury lifestyle brand defined by classic American sportswear with an eclectic
sensibility, which embodies the personal style and spirit of its co-founder and creative director, Tory Burch.



Versace is a prestigious fashion and lifestyle brand, symbol of Italian luxury world-wide. The collection is intended for
men and women looking for a contemporary style that is strong in personality, sexy and sophisticated. The eyewear collection, under license since 2003, perfectly combines glamour and modern elegance,
bearing the distinctive details taken from the graphic direction of the fashion house.



Versus is the true rock and roll soul of Versace, a line created for young women looking for a distinctive "rock-chic"
style.

MANUFACTURING

Plants and Facilities

Our primary manufacturing facilities are located in Italy, China and the United States. In 2010, 2009 and 2008, our manufacturing facilities produced a combined
total of approximately 56.6 million, 48.7 million and 50.1 million prescription frames and sunglasses, respectively.

We
have six manufacturing facilities in Italy: five in northeastern Italy, the area in which most of the country's optical industry is based, and one near Turin. All of these facilities
are highly automated, which has made it possible for us to maintain a high level of production without significant capital outlay.

Over
the years, we have consolidated our manufacturing processes by concentrating a specific production technology in each of the Italian facilities. This consolidation has enabled us to
improve both the productivity and quality of our manufacturing operations. We make plastic frames in the Agordo, Sedico, Pederobba and Lauriano facilities, while we produce metal frames in Agordo and
Rovereto. We

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produce
certain metal frame parts in the Cencenighe plant. The Lauriano facility also makes crystal and polycarbonate lenses for sunglasses.

In
2006, we modernized our operations in Italy by building a new approximately 32,000 square-meter manufacturing facility to produce acetate frames and sunglasses. In 2007, we
further expanded our manufacturing facilities in Italy by approximately 28,000 square meters in order to rationalize the product production flow.

From
1998 to 2001, we operated a facility in China to manufacture prescription frames, through our 50 percent-owned joint venture (Tristar Optical Company Ltd.) with a
Japanese partner. In 2001, we acquired the remaining 50 percent interest in this Chinese manufacturer. In 2006, we increased our manufacturing capacity in China through the construction of a
new approximately 26,000 square-meter manufacturing facility to produce both metal and plastic frames. After the
construction of this new facility, our annual average daily production in China increased by approximately 80 percent in 2006 compared to 2005. In 2007, we further expanded our
manufacturing capacity in China by approximately 74,000 square meters. The percentage of private label products produced at our facilities in China has decreased in favor of increased
production of certain of our core, fashion and North American brands.

In
2010, Tristar also began to produce plastic sun lenses, which are paired with frames manufactured by the same Chinese plant. Production started in September, reaching a total output
of approximately 400,000 pairs of lenses by the end of the year.

Our
Dongguan plants, in China's Guangdong province, make both plastic and metal frames.

Our
Foothill Ranch facility in California manufactures high-performance sunglasses and prescription frames and lenses and assembles most of Oakley's eyewear products, while
Oakley's manufacturing center in Dayton, Nevada produces the frames used in its X Metal® (a proprietary alloy) eyewear products. We also operate a small plant in India serving
the local market.

In
2010, approximately 45 percent of all frames manufactured by us were metal-based, and the remainder was plastic.

The
manufacturing process for both metal and plastic frames begins with the fabrication of precision tooling and molds based on prototypes developed by in-house designers and
engineering staff. We seek to use our manufacturing capacity to reduce the lead time for product development and thereby adapt quickly to market trends and to contain production costs, as well as
maintain smaller and more efficient production runs so that we can better respond to the varying needs of different markets.

The
manufacturing process for metal frames has approximately 70 phases, beginning with the production of basic components such as rims, temples and bridges, which are produced
through a molding process. These components are then welded together to form frames over numerous stages of detailed assembly work. Once assembled, the metal frames are treated with various coatings
to improve their resistance and finish, and then prepared for lens fitting and packaging.

We
manufacture plastic frames using either a milling process or injection molding. In the milling process, a computer-controlled machine carves frames from colored plastic sheets. This
process produces rims, temples and bridges that are then assembled, finished and packaged. In the injection molding process, plastic resins are liquefied and injected into molds. The plastic parts are
then assembled, coated, finished and packaged.

We
engage in research and development activities relating to our manufacturing processes on an on-going basis. As a result of such activities, we have invested and will
continue to invest in automation and in innovative technologies, thus increasing efficiency while improving quality. Costs associated with research and development activities are expensed when
incurred and are not significant.

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We
utilize third-party manufacturers to produce Oakley apparel, footwear, watches, electronically-enabled eyewear and certain goggles.

Suppliers

The principal raw materials and parts purchased for the manufacturing process include plastic resins, metals, lenses and frame parts.

We
purchase a substantial majority of raw materials in Europe and, to a lesser extent, in Asia and the United States. In addition, we use certain external suppliers for frames, lenses,
eyeglass/frame cases and packaging materials and for some logistic services.

Although,
historically, prices of the principal raw materials used in our manufacturing process have been stable, in 2010, we implemented a process to hedge the risk of price changes for
gold and palladium, in order to have a more predictable cost. Regarding the other raw materials used in our manufacturing process, we negotiate prices directly with our suppliers.

We
have built strong relationships with our major suppliers. In 2010, we started a risk management project in our purchasing function to identify material risks (impact and probability)
and put in place mitigation actions if not already in place. With most suppliers, we maintain agreements that prohibit disclosure of our proprietary information or technology to third parties.
Although our Oakley subsidiary relies on outside suppliers for most of the specific molded components of its glasses, goggles, watches and footwear, it generally retains ownership of the molds used in
the production of the components. We believe that most of the components can be obtained from one or more alternative sources within a relatively short period of time, if necessary or desired. In
addition, to further mitigate risk, we have developed an in-house injection molding capability for sunglass lenses.

Essilor S.A.
("Essilor") has become one of the largest suppliers of our retail operations, accounting for 10 percent of our total merchandise purchases in 2010 and
9 percent in 2009. Although we do not have formal, long-term contracts with Essilor or any of our other suppliers, we have not experienced any significant interruptions in our
supplies. We believe that the loss of Essilor S.A. or any of our other vendors would not have a significant impact on our future operations as we could replace them quickly with other
third-party suppliers.

In
February 2010, Luxottica and Essilor International formed a long-term joint venture for the Australian and New Zealand markets. The joint venture manages Eyebiz
Laboratories Pty Limited ("Eyebiz"), Luxottica's Sydney-based optical lens finishing laboratory, which as a result of this alliance is majority controlled by Essilor.

Essilor
Australia Pty Limited, Eyebiz and Luxottica Retail Australia Pty Limited then entered into a 10-year manufacturing and supply agreement whereby Eyebiz performs lens
laboratory services for Luxottica and distributes to Luxottica stores, which include OPSM, Budget Eyewear and Laubman & Pank, a range of finished optical lenses in Australia and New Zealand.

Quality Control

The "Made in Italy" feature of Luxottica products represents the "culture of quality" that has been central to our organization.

Most
of the manufacturing equipment that we use is specially designed and adapted for our manufacturing processes. This helps us to respond more quickly to customer demand and adhere to
strict quality-control standards.

Quality
and process control teams regularly inspect semi-finished products during the various phases of production, verifying the feasibility of prototypes in the design
phase, controlling standards across the spectrum of products in the production phase, and subsequently checking for resistance to

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wear
and tear and reviewing optical properties in relation to type of use. The manufacturing processes and materials used by primary suppliers are also controlled and certified. Through ongoing
verification of precision and expertise in all phases of production, we seek to manufacture products of the highest quality.

We
design products to meet or exceed relevant industry standards for safety, performance and durability. Throughout the development process, our optics products undergo extensive testing
against standards established specifically for eyewear by ANSI (Z.80.3), ASTM, Standards Australia Limited (AS 1067) and EU (EN 1836 and ISO EN 12870). These standards
relate to product safety and performance and provide quantitative measures of optical quality, UV protection, light transmission and impact resistance.

Due
to the efficiency of our quality controls, the return rate for defective merchandise manufactured by us is approximately one percent.

DISTRIBUTION

Our Principal Markets

The following table presents our net sales by geographic market and segment for the periods indicated:

Year Ended December 31,(Amounts in thousands of Euro)

2010

2009

2008European Retail


103,585


92,054


64,572European Wholesale


1,059,942


980,359


1,067,893North America Retail


2,942,009


2,591,689


2,599,003North America Wholesale


539,916


474,248


497,517Asia-Pacific Retail


495,083


442,105


435,859Asia-Pacific Wholesale


250,054


199,552


209,980Other Retail


20,956


13,131


9,711Other Wholesale


386,491


301,181


317,076Total


5,798,035


5,094,318


5,201,611


Logistics

Our distribution system is globally integrated and supplied by a centralized manufacturing programming platform. The network linking the logistics and sales
centers to the production facilities in Italy and China also provides daily monitoring of global sales performance and inventory levels so that manufacturing resources can be programmed and warehouse
stocks re-allocated to meet local market demand. This integrated system serves both the retail and wholesale businesses and is one of the most efficient and advanced logistics systems in
the industry, with 18 distribution centers worldwide, of which 8 are in the Americas, 7 are in the Asia-Pacific region and 3 are in the rest of the world.

We
have three main distribution centers (hubs) in strategic locations serving our major markets: Sedico in Europe, Atlanta in the Americas and Dongguan in the Asia-Pacific
region. They operate as centralized facilities, offering customers a highly automated order management system that reduces delivery times and keeps stock levels low.

The
Sedico hub was opened in 2001 and updated with a new automated system in 2006. In 2010, it managed over 13,500 orders per day, including eyeglasses and spare parts. Sedico
ships over 170,000 units daily to customers in Europe, the Middle East and Africa and to our distribution centers in the rest of the world, from which they are then shipped to local customers.

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The Sedico hub enabled us to close the local warehouses throughout Europe that characterized the previous distribution system, improving the speed and efficiency
of our distribution, as well as eliminating unnecessary overhead expenses. During 2009, the information system SAP (Systems, Applications and Products in Data Processing) was implemented in the Sedico
distribution center. The new system has allowed us to efficiently control and allocate our customers' orders.

The
Atlanta facility, opened in 1996, has consolidated several North America-based facilities into a single state-of-the-art distribution center
located close to one of the major airport hubs of the United States. This facility has a highly advanced cross-belt sorting system that can move up to 140,000 frames per day at a
conveyor belt speed of 1.5 meters a second. In late 2009, the facility, which was originally a retail-only distribution center, started serving both our retail and wholesale
businesses in the North American market. Atlanta (Retail) ships to three of the Luxottica retail brands: LensCrafters, Sunglass Hut and Sears for the United States, Canada and Caribbean, servicing
over 3,500 stores with ophthalmic and sun frames as well as lenses, contact lenses and accessories.

The
Dongguan hub was opened in 2006 and employs approximately 230 people who manage an average of 100,000 units of finished and semi-finished frames per day.

Following
the SAP implementation in Sedico in 2009, we implemented the same IT platform in the Dongguan hub in 2010. In addition to the advantages resulting from the European
implementation, now we are able to leverage advantages in Asia resulting from greater network control over orders and inventories. With the continuing growth in the region, the Dongguan hub has become
an integral and strategic part of our distribution network. We continue to invest in services and volume capacity to become even more efficient in the region.

System
implementation will continue in 2011 in our North American Distribution Centers to enhance inventory control, network optimization and the order management process.

Wholesale Distribution

Our wholesale distribution structure covers more than 130 countries, with 42 directly controlled or majority-owned operations in the major markets
and approximately 100 independent distributors in other markets. Each wholesale subsidiary operates its own network of sales representatives who are normally retained on a commission basis.
Relationships with large international, national and regional accounts are generally managed and serviced by employees.

Customers
of our wholesale business are mostly retailers of mid- to premium-priced eyewear, such as independent opticians, optical retail chains, specialty sun retailers,
department stores and duty-free shops. In North America and other areas, the main customers also include independent optometrists and ophthalmologists and premium department stores.

We
also distribute certain brands, including Oakley, to sporting goods stores and specialty sports stores, including bike, surf, snow, skate, golf and motor sports stores.

We
seek to provide our wholesale customers with pre- and post-sale services to enhance their business. These services are designed to provide customers with the
best product and in a time frame and manner that best serve our customers' needs.

We
maintain close contact with our distributors in order to monitor sales and control the quality of the points of sale that display our products. We typically enter into distribution
agreements with importers and distributors that establish minimum annual purchases and impose territorial limitations. In addition, to the extent permitted by law, we allow distribution only through
specifically authorized retail channels and qualified sales agents. No single customer or group of related customers accounted for more than five percent of our consolidated net sales in any of the
past three years. We do not believe that

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the
loss of any single customer would have a material adverse effect on our financial condition or results of operations.

Nearly
a decade ago, Luxottica introduced STARS (Superior Turn Automatic Replenishment System). This business unit, which is a part of the Wholesale division, provides third party
customers with an enhanced partnership service. Developed in 2002, originally under the name "Retail Service", STARS offers management directly by Luxottica of the product selection activities,
production and assortment planning and automatic replenishment of products in the storeall of these activities previously managed directly by the third party customer.

STARS
provides the stores with a higher level of service, exploiting the knowledge of local markets and brands in order to present a fresh and high-turnover product, and
utilizing systems, tools and state-of-the-art planning techniques to ensure an optimal inventory level at the point of sale.

When
the project started in 2002, STARS managed 4 stores, growing to 100 by 2004 and maintaining a progressive growth reaching 1,000 points of sale by the end of 2009. By the end
of 2010, STARS served a total of approximately 1,500 stores in the major European markets, Latin America and Emerging Markets.

Retail Distribution

With a strong portfolio of retail brands, we are well positioned to reach different segments of the market. The retail portfolio offers a variety of
differentiation points for consumers, including the latest in designer and high-performance sun frames, advanced lens options, advanced eye care, everyday value, and
high-quality vision care health benefits.

As
of March 31, 2011, our retail business consisted of 5,911 corporate stores and 514 franchised or licensed locations as follows:

China /
Hong
Kong



Africa
and
Middle
East



Central
and
South
AmericaNorth
America

Asia-
Pacific



South
AfricaEurope

TotalLensCrafters

989



202









1,191Pearle Vision

330













330Sunglass Hut(1)

1,874

259

5

75



116



2,329Ilori and The Optical Shop of Aspen

48













48Oliver Peoples

6













6Oakley retail locations(2)

124

18



13





4

159Sears Optical

828













828Target Optical

323













323OPSM(3)



400











400Laubman & Pank



65











65Budget Eyewear



106











106Bright Eyes



51











51David Clulow(4)







75







75Franchised or licensed locations(5)

361

112



9

29



3

5144,883

1,011

207

172

29

116

7

6,425


(1)Includes
Sunglass Icon locations.(2)Includes
Oakley "O" stores and vaults.(3)Includes
33 stores acquired from Just Spectacles.(4)Includes
David Clulow joint-venture stores.(5)Includes
primarily franchised and licensed locations for Pearle Vision (350 locations) and Bright Eyes (73 locations), with the remaining
locations for Budget Eyewear, David Clulow, Sunglass Hut, Oakley "O" Stores and Vaults, Oliver Peoples, Icon-HMS.


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Our retail stores sell not only prescription frames and sunglasses that we manufacture but also a wide range of prescription frames, lenses and
other ophthalmic products manufactured by other
companies. In 2010, units manufactured with our own brand names or our licensed brands represented approximately 80.2 percent of the total sales of frames based on units sold by the retail
division (77.1 percent in 2009).

Our
optical retail operations are anchored by leading brands such as LensCrafters and Pearle Vision in North America, and OPSM, Laubman & Pank and Budget Eyewear, which are active
throughout Australia and New Zealand. We also have a major retail presence in China, where we operate in the premium eyewear market with LensCrafters. Due to the fragmented nature of the European
retail market, we do not operate optical retail stores in Europe outside of the United Kingdom, where in 2008 we increased our stake in the David Clulow chain, which sells both prescription and sun
products. In 2010, we completed the acquisition of the David Clulow chain, bringing our ownership in the subsidiary to 100 percent. As of March 31, 2011, our optical retail business
consisted of approximately 3,650 retail locations globally.



As of March 31, 2011, we operated a retail network of 1,191 LensCrafters stores, of which 989 are in North America
and 202 stores are in China and Hong Kong. LensCrafters is currently the largest optical retailer in North America in terms of sales. LensCrafters stores offer a wide selection of prescription frames
and sunglasses, mostly made by Luxottica, in addition to a wide range of lenses and optical products made by other suppliers. LensCrafters' products include innovative lenses, such as
FeatherWates® (lightweight, thin and impact-resistant lenses), DURALENS® (super scratch-resistant lenses), Advanced View Progressive
(free-form, digitally surfaced progressive lenses), Invisibles® (anti-reflective lenses) and MVP Maximum View Progressives® (multi-focal lenses
without visible lines). Points of sale are normally in high-traffic commercial malls and shopping centers and have an on-site optometrist (sometimes a Luxottica employee) so
that customers can have more immediate eye examinations. Most LensCrafters stores in North America also include a lens finishing laboratory, which improves the customer service level. During the last
few years, we have invested in the premium aspects of the LensCrafters brand, adding supplementary elements such as an exclusive new store concept currently being implemented in store renovations
across North America, associate training and advertising and marketing, which together represent the premium brand and future direction of LensCrafters.

In
2006, we began to expand the LensCrafters brand in China by rebranding most of our stores there, which were acquired through the acquisition of three retail chains. As of
March 31, 2011, we operated 202 stores in China and Hong Kong. Hong Kong is one of China's most significant luxury markets, and launching LensCrafters as a premium brand in Hong Kong was
important for increasing awareness and consumer demand for Luxottica products and services in the region.



Pearle Vision is one of the largest optical retail chains in North America. Although LensCrafters and Pearle Vision both address the
mid- to high-end customer bracket, their positioning is complementary. Pearle Vision focuses on the factors that made the brand a success: customers' trust in the doctor's
experience and the quality of service they receive. Pearle Vision stores are mostly located in strip malls instead of the conventional malls where most LensCrafters and Sunglass Hut stores are
located. The successful relaunching of the Pearle Vision brand in 2004 and 2005 was centered on a return to its original values, which had made Pearle Vision the "Home of Trusted Eyecare" for
generations of Americans. A product mix increasingly geared to high quality has sought to restore strong customer relationships, as has the emphasis on doctors in advertising campaigns.

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As
of March 31, 2011, Pearle Vision operated 330 corporate stores and had 350 franchise locations throughout North America.

We
also operate a network of retail locations in North America operating as Sears Optical and Target Optical, our Licensed Brands, which use the brand names of their respective host
American department store. These points of sale offer consumers the convenience of taking care of their optical needs while shopping at these department stores. Both brands have a precise market
positioning that we have reinforced by improving service levels while strengthening their fashion reputation by offering brands such as Ray-Ban and Vogue. As of March 31, 2011, we
operated 828 Sears Optical and 323 Target Optical locations throughout North America.



OPSM, the largest of the three optical chains we operate in Australia and New Zealand, is a leading eyewear retail brand for luxury and
fashion-minded customers. In 2010, OPSM continued to solidify its position as the market leader in the Australia/New Zealand optical retail market. In July 2010, the brand launched its new flagship
store OPSM Eye Hub and in September 2010, the brand successfully launched its new OPSM Loves Eyes marketing campaign. As of March 31, 2011, we owned 357 OPSM corporate stores throughout
Australia. OPSM also has 43 corporate-owned stores in New Zealand, mainly in large urban areas.



Laubman & Pank targets the independent optical shopper looking for quality eyecare and service. As of March 31, 2011, we
owned 65 Laubman & Pank corporate stores throughout Australia.



Budget Eyewear focuses on the value shopper and in 2010 launched clearer and more transparent pricing through its Price It Yourself
(PIY) menu. Budget Eyewear provides an easy selection process for frames and lens packages in a bright and modern store environment. As of March 31, 2011, we owned 92 Budget Eyewear corporate
stores throughout Australia and had 9 franchise locations. Budget Eyewear also has 14 corporate stores in New Zealand.



On November 26, 2010, we acquired the Optifashion Australia Pty Limited group from HAL Optical Investments B.V. The
acquisition included 47 corporate stores (40 optical and 7 sun) and 9 franchises, trading under brands including Just Spectacles. We are in the process of rebranding these
stores under Luxottica trade names.



EyeMed Vision Care is one of the largest managed vision care operators in the United States, serving over 28.5 million members
in large and medium size companies and government entities and through insurance companies. EyeMed has a network of over 24,000 locations, including opticians, ophthalmologists, optometrists and
chains operated by Luxottica.

EyeMed
Vision Care seeks to offer quality, choice, value and service excellenceall priority concerns for employers shopping for vision care programs, especially for large
groups. Customers using such services benefit from the quality of the products and the wide reach of the distribution network, enjoying a broad range of choices among the numerous stores in the
Group's chains and independent optical retailers.

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In December 2009, we entered into a strategic multi-year e-commerce alliance to expand online access to contact
lenses in the North American market with Drugstore.com, Inc., a leading online retailer of health, beauty, vision and pharmacy products.

Under
this exclusive agreement, Vision Direct, Inc., a leading online contact lens retailer and a wholly-owned subsidiary of Drugstore.com, Inc., has collaborated with us
to develop branded contact lens e-commerce sites for our North American retail business and provide customer care and fulfillment services. The alliance has enabled us, starting with our
retail brands, to offer a comprehensive platform for consumers to conveniently purchase contact lenses in person, by telephone or online. In addition, the two companies are pursuing synergies, such as
purchasing contact lenses on behalf of the alliance, cross-marketing initiatives and cooperating in a number of other related areas.



Together with LensCrafters' over 900 in-store labs, we operate five central lens finishing labs in North America.
Combining a broad presence in the market with the capacity for handling lens finishing reduces the time and cost of lens finishing work and improves quality of service. All the labs use highly
advanced technologies to meet growing demand. The five central laboratories serve all the Pearle Vision stores, the Licensed Brands stores, LensCrafters and a number of franchises. The labs in
LensCrafters stores have been upgraded to help Sears and Pearle Vision stores (including those under franchise) to handle peak demand.

In
addition, we operate Oakley optical lens laboratories in the United States, Ireland and Japan. These labs provide Oakley prescription lenses to the North and South American, European
and Asian markets, respectively, enabling us to achieve expeditious delivery, better quality control and higher optical standards.



Since the acquisition of Sunglass Hut in 2001, we have become a world leader in the specialty sunglass retail business. As of
March 31, 2011, Sunglass Hut had 2,385 stores worldwide, of which 2,329 are corporate stores and 56 are franchise locations. The former are in North America,
Asia-Pacific, Europe and South Africa, whereas the latter are in the Middle East, India, the Philippines and Thailand.

Founded
in the United States in 1971 to operate in department stores, Sunglass Hut gradually expanded its base of stores and kiosks in shopping malls to new retail locations on city
shopping streets and in airports. Over the years, Sunglass Hut focused increasingly on selling premium sunglasses. In 2007, we developed an exclusive new store concept, which is now being extended to
all prime Sunglass Hut locations around the world. This repositioning was made possible by substantial changes to the product mix allowing the chain to focus more on fashion and luxury brands,
especially for women, while maintaining a varied selection of lifestyle, sport and performance sunglasses.

The
chain has recently reinforced its presence in the department store channel through long-term strategic agreements with Myers in Australia, Edgards in South Africa and
Macy's Inc. ("Macy's") in the United States.

On
December 4, 2009, we entered into an agreement to open Sunglass Hut points of sale in Macy's department stores in the United States. At March 31, 2011, we operated
approximately 590 Sunglass Hut departments in Macy's and are scheduled to open approximately 110 additional locations in Spring 2011. When the rollout is complete, Sunglass Hut will be the exclusive
operator of Macy's in-store sunglass departments and Macy's department stores will be the exclusive U.S. department store with Sunglass Hut locations.

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ILORI is Luxottica's high-end fashion sunwear retail brand, with 24 stores in North America as of March 31, 2011,
including flagship stores in the SoHo neighborhood of New York City and in Beverly Hills, California. ILORI caters to a different, more exclusive clientele than Sunglass Hut, offering a richer
purchasing experience in prestige locations, featuring sophisticated luxury collections, exclusive niche brands and highly personalized service.



Founded in the 1970s, The Optical Shop of Aspen is known in the optical industry for its luxury brands for both prescription frames and
sunglasses and its first-class customer service. As of March 31, 2011, we operated 24 stores in some of the most upscale and exclusive locations throughout the United States.



We operate six luxury retail stores under the Oliver Peoples brand. The Oliver Peoples brand retail stores only offer Oliver Peoples,
Mosley Tribes and Paul Smith branded optical products. Two additional Oliver Peoples retail locations are operated under license in Tokyo and Los Angeles.



In Europe, we operate David Clulow, a premium optical retailer operating in the United Kingdom and Ireland, predominantly in London and
the Southeast of the United Kingdom. The brand emphasizes service, quality and fashion and our marketing is targeted to reinforce these brand values and build long-term relationships with
our customers. In addition to operating optical stores, David Clulow operates a number of sunglass concessions in upmarket department stores, further reinforcing our position as a premium brand in the
United
Kingdom. As of March 31, 2011, David Clulow operated 39 corporate-owned locations (including 9 joint ventures), 4 franchise locations and 36 sun stores/concessions.



First established in 1985, Bright Eyes is one of Australia's largest and fastest-growing sunglass chains, with over 120 sunglass
stores across the continent. As of March 31, 2011, Bright Eyes operated 51 corporate store locations and 73 franchise locations, mostly in tourist resorts and
high-traffic areas.



As of March 31, 2011, we operated 159 Oakley "O" Stores and Vaults worldwide, offering a full range of Oakley products
including sunglasses, apparel, footwear and accessories. These stores are designed and merchandised to immerse consumers in the Oakley brand through innovative use of product presentation, graphics
and original audio and visual elements. In the United States, Oakley "O" Stores are in major shopping centers. Oakley's retail operations also are located in Mexico, Europe and the
Asia-Pacific region.



Another important sales channel is e-commerce, including the Oakley and the Ray-Ban websites
(www.oakley.com,www.Ray-Ban.com), which are complementary to the retail operations and
international distribution. The websites allow consumers to purchase Oakley and Ray-Ban products as efficiently as possible, increasing awareness of both brands, improving customer service
and communicating the brands' values and essence.

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MARKETING

Our marketing and advertising activities are designed primarily to enhance our image and our brand portfolio and to drive traffic into our retail locations.

Advertising
expenses amounted to approximately six percent of our net sales in 2010.

Marketing Strategy for Our Wholesale Business

Our marketing strategy for the wholesale business is focused on promoting our extensive brand portfolio, our corporate image and the value of our products.
Advertising is extremely important in supporting our marketing strategy, and therefore we engage in extensive advertising activities, both through various media (print, radio and television, as well
as billboard advertising and digital media) directed at the end consumer of our products and at the point of sale (displays, counter cards, catalogs, posters and product literature).

In
addition, we advertise in publications targeted to independent practitioners and other market-specific magazines and participate in major industry trade fairs, where we promote some
of our new collections.

We
also benefit from brand-name advertising carried out by licensors of our designer brands intended to promote the image of the eyewear collections. Our advertising and
promotional efforts in respect of our licensed brands are developed in coordination with our licensors. We contribute to the designer a specified percentage of our sales of the designer line to be
devoted to its advertising and promotion.

For
our Oakley brand, we also use less conventional marketing methods, including sports marketing, involvement in grass-roots sporting events and targeted product allocations. The
exposure generated by athletes wearing Oakley products during competition and in other media appearances serves as a more powerful endorsement of product performance and style than traditional
commercial endorsements and results in strong brand recognition and authenticity on a global level.

Marketing Strategy for Our Retail Business

We engage in promotional and advertising activities through our retail business with the objectives of attracting customers to the stores, promoting sales,
building our image and the visibility of our retail brands throughout the world and encouraging customer loyalty and repeat purchases.

The
"O" Stores and Vaults are designed and merchandised to immerse the consumer in the Oakley brand through innovative use of product presentation, graphics and original audio and visual
elements.

A
considerable amount of our retail marketing budget is dedicated to direct marketing activities, such as communications with customers through mailings and catalogs. Our direct
marketing activities benefit from our large database of customer information and investment in customer relationships, marketing technologies and skills in the United States and in Australia. Another
significant portion of the marketing budget is allocated to broadcast and print media, such as television, radio and magazines, designed to reach the broad markets in which we operate with
image-building messages about our retail business.

ANTI-COUNTERFEITING POLICY

Intellectual property is one of our most important assets. We protect it through the registration and enforcement of our trademarks and patents around the world.
Our commitment to maintaining and strengthening our anti-counterfeiting program is demonstrated through the strength of our anti-counterfeiting and brand protection team, which
leverages the strengths of our global organization. This allows us, among other things, to implement a global anti-counterfeiting program to combat the

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widespread
phenomenon of counterfeit goods, sending a strong message to the infringers that we will exercise our rights against both the retailers of counterfeit eyewear, such as street vendors, and
those that supply these sellers. Through our strong investigative network, especially in China, we have been able to identify key sources of counterfeit goods, organize raids on their premises in
cooperation with local law enforcement and file legal actions against the counterfeiters.

Additionally,
we continue to consolidate and strengthen our cooperation with customs organizations around the world, which have helped us to stop, seize and destroy hundreds of thousands
of counterfeit goods each year. We dedicate considerable efforts to monitoring the trafficking of
counterfeit goods through the internet, in order to remove the offers for counterfeit eyewear from certain popular on-line auction platforms and shut down the websites that violate our
intellectual property rights through the sale of counterfeit products or the unauthorized use of our trademarks.

TRADEMARKS, TRADE NAMES AND PATENTS

Our principal trademarks or trade names includeLuxottica, Ray-Ban, Oliver Peoples, Oakley, Persol, Vogue, Arnette, Revo,
LensCrafters, Sunglass Hut, ILORI, Pearle Vision, OPSM, Laubman & Pank, Budget Eyewearand the Oakley ellipsoid"O"and
square"O"logos. Our principal trademarks are registered worldwide. Other thanLuxottica, Ray-Ban, Oakley,
LensCrafters, Sunglass Hut, Pearle Vision, OPSMand the Oakley ellipsoid"O"and square"O"logos, we do not believe that any single trademark or trade name is material to our business or results of operations. The collection ofOakleyandRay-Banproducts accounted for approximately 11.9 percent and 19.9 percent, respectively, of our
net sales in 2010. We believe that our trademarks have significant value for the marketing of our products and that having distinctive marks that are readily identifiable is important for creating and
maintaining a market for our products, identifying our brands and distinguishing our products from those of our competitors. Therefore, we utilize a combination of trademarked logos, names and other
attributes on nearly all of our products.

We
utilize patented and proprietary technologies and precision manufacturing processes in the production of our products. As of March 31, 2011, we held a portfolio of over
700 Oakley-related patents worldwide that protect our designs and innovations. Some of the most important of these patents relate to the following categories: innovations in lens technology and
the associated optical advances; electronically enabled eyewear; innovations in frame design and functionality; biased, articulating and dimensionally stable eyewear; and interchangeable lenses.

See
Item 3"Key InformationRisk FactorsIf we are unable to protect our proprietary rights, our sales might suffer, and we may incur
significant costs to defend such rights."

LICENSE AGREEMENTS

We have entered into license agreements to manufacture and distribute prescription frames and sunglasses with numerous designers. These license agreements
typically have terms ranging from three to ten years, but may be terminated early by either party for a variety of reasons, including non-payment of royalties, failure to meet minimum
sales thresholds, product alteration and, under certain agreements, a change in control of Luxottica Group S.p.A.

Under
these license agreements, we are required to pay a royalty which generally ranges from five percent to 14 percent of the net sales of the relevant collection, which may be
offset by any guaranteed minimum royalty payments. The license agreements also provide for a mandatory marketing contribution that generally amounts to between five and ten percent of net sales.

We
believe that early termination of one or a small number of the current license agreements would not have a material adverse effect on our results of operations or financial condition.
Upon any early

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termination
of an existing license agreement, we expect that we would seek to enter into alternative arrangements with other designers to reduce any negative impact of such a termination.

The
table below summarizes the principal terms of our most significant license agreements.

Licensor

Licensed Marks

Territory

ExpirationBurberry Limited

Burberry
Burberry Check
Equestrian Knight Device
Burberry Black Label*

Worldwide exclusive license

December 31, 2015Bvlgari S.p.A.

Bvlgari

Worldwide exclusive license

December 31, 2020Chanel Group

Chanel

Worldwide exclusive license

March 31, 2014Coach, Inc.**

Coach Poppy
Coach
Reed Krakoff

Worldwide exclusive license

June 30, 2016
    (renewable until
    June 30, 2024)Dolce & Gabbana S.r.l.

Dolce & Gabbana
D&G

Worldwide exclusive license

December 31, 2015Donna Karan Studio LLC

Donna Karan
DKNY

Worldwide exclusive license

December 31, 2014
    (renewable until
    December 31,
    2019)Gianni Versace S.p.A.

Gianni Versace
Versace
Versace Sport
Versus

Worldwide exclusive license

December 31, 2022Jones Investment Co. Inc.

Anne Klein New York
Lion Head Design
AK Anne Klein
A-Line

Worldwide exclusive license

December 31, 2012Paul Smith Limited

Paul Smith
PS Paul Smith

Worldwide exclusive license

December 31, 2013Prada S.A.

Prada
Miu Miu

Worldwide exclusive license

December 31, 2013
    (renewable until
    December 31,
    2018)PRL USA Inc.
The Polo/Lauren
    Company LP

Polo by Ralph Lauren
Ralph Lauren
Ralph (Polo Player
    Design) Lauren
RLX
RL
Ralph
Ralph/Ralph Lauren
Lauren by Ralph Lauren
Polo Jeans Company
The Representation of the
    Polo Player
Chaps***

Worldwide exclusive license

March 31, 2017


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Licensor

Licensed Marks

Territory

ExpirationRetail Brand
    Alliance, Inc.****

Brooks Brothers

Worldwide exclusive license

December 31, 2014
    (renewable until
    December 31,
    2019)Salvatore Ferragamo
    Italia S.p.A.

Salvatore Ferragamo
Ferragamo

Worldwide exclusive license

December 31, 2011Stella McCartney Limited

Stella McCartney

Worldwide exclusive license

December 31, 2014
    (renewable until
    December 31,
    2019)Tiffany and Company

TIFFANY & CO.
Tiffany

Exclusive license in United States of America including all possessions and territories thereof, Canada, Mexico, Barbados, Cayman Islands, Jamaica, Panama, Netherlands Antilles, South America
(excluding Argentina), Middle East (excluding Iran, Iraq, Yemen, Jordan and Kuwait), Morocco, Tunisia, South Africa, United Kingdom, France, Germany, Italy, Austria, Holland, Spain, Belgium, Greece, Poland, Portugal, Switzerland, Bosnia, Bulgaria,
Kosovo, Malta, Romania, Slovakia, Hungary, Croatia, Slovenia Republic, Russian Federation, Azerbaijan, Kazakhstan, Republic of Georgia, Ukraine, Baltic Countries, Singapore, Taiwan, Thailand, Vietnam, China, India, Pakistan, Philippines, Korea, Japan,
 Australia

December 31, 2017Tory Burch LLC

Tory Burch
TT

Worldwide exclusive license

December 31, 2014
    (renewable until
    December 31,
    2018)


*Japan
only.**The
agreement will begin on January 1, 2012.***United
States, Canada, Mexico and Japan only.****Retail
Brand Alliance, Inc. is indirectly owned and controlled by one of our directors.


REGULATORY MATTERS

Our products are subject to governmental health and safety regulations in most of the countries where they are sold, including the United States. We regularly
inspect our production techniques and standards to ensure compliance with applicable requirements. Historically, compliance with such requirements has not had a material effect on our operations.

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In
addition, governments throughout the world impose import duties and tariffs on products being imported into their countries. Although in the past we have not experienced situations in
which the duties or tariffs imposed materially impacted our operations, we can provide no assurances that this will be true in the future.

Our
past and present operations, including owned and leased real property, are subject to extensive and changing environmental laws and regulations pertaining to the discharge of
materials into the environment, the handling and disposition of waste or otherwise relating to the protection of the environment. We believe that we are in substantial compliance with the applicable
environmental laws and regulations. However, we cannot predict with any certainty that we will not in the future incur liability under environmental statutes and regulations with respect to
contamination of sites formerly or currently owned or operated by us (including contamination caused by prior owners and operators of such sites) and the off-site disposal of hazardous
substances.

Our
retail operations are also subject to various legal requirements in the United States, Australia, Canada, China, New Zealand, Hong Kong, Singapore and Malaysia that regulate the
permitted relationships between licensed optometrists or ophthalmologists, who primarily perform eye examinations and prescribe corrective lenses, and opticians, who fill such prescriptions and sell
eyeglass frames.

Through
our acquisition of Oakley, we produce and sell to the U.S. government, including the U.S. military, and to international governments, certain Oakley and Eye Safety Systems
protective eyewear products. As a result, our operations are subject to various regulatory requirements, including the necessity of obtaining government approvals for certain products,
country-of-origin restrictions on materials in certain products, U.S.-imposed restrictions on sales to specific countries, foreign import controls, expropriation of assets and
various decrees, laws, taxes, regulations, interpretations and court judgments that are not always fully developed and that may be retroactively or arbitrarily applied. Additionally, we could be
subject to periodic audits by U.S. government personnel for contract and other regulatory compliance.

COMPETITION

We believe that our integrated business model, innovative technology and design, integrated sunglass manufacturing capabilities, effective brand and product
marketing efforts and vigorous protection of our intellectual property rights are important aspects of competition and are among our primary competitive advantages.

The
prescription frame and sunglasses industry is highly competitive and fragmented. As we market our products throughout the world, we compete with many prescription frame and sunglass
companies in various local markets. The major competitive factors include fashion trends, brand recognition, marketing strategies, distribution channels and the number and range of products offered.
We believe that some of our largest competitors in the design, manufacturing and wholesale distribution of prescription frames and sunglasses are De Rigo S.p.A., Marchon Eyewear, Inc.,
Marcolin S.p.A., Safilo Group S.p.A., Silhouette International Schmied AG and Maui Jim, Inc.

Several
of our most significant competitors in the manufacture and distribution of eyewear are significant vendors to our retail division. Our success in these markets will depend on,
among other things, our ability to manage an efficient distribution network and to market our products effectively as well as the popularity and market acceptance of our brands. See
Item 3"Key InformationRisk FactorsIf we are unable to successfully introduce new products, our future sales and operating performance will suffer" and
"If we fail to maintain an efficient distribution network in our highly competitive markets, our business, results of operations and financial condition could suffer."

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The highly competitive optical retail market in North America includes a large number of small independent competitors and several national and regional chains of
optical superstores. In recent years, a number of factors, including consolidation among retail chains and the emergence of optical departments in discount retailers, have resulted in significant
competition within the optical retailing industry. We compete against several large optical retailers in North America, including Wal-Mart and Eye Care Centers of America, and, in the
sunglasses area, department stores and numerous sunglass retail chains and outlet centers. Our optical retail operations emphasize product quality, selection, customer service and convenience. We do
not compete primarily on the basis of price.

We
believe that Oakley and our other sports brands are leaders in non-prescription sports eyewear, where they mostly compete with smaller sunglass and goggle companies in
various niches and a number of large eyewear and sports products companies that market eyewear.

The
managed vision care market is highly competitive. EyeMed has a number of competitors, including Vision Service Plan (VSP), Davis Vision and Spectera. While VSP was founded almost
56 years ago and is the current market leader, EyeMed's consistent year-over-year growth has enabled us to become the second-largest market competitor in terms of funded
lives. EyeMed competes based on its ability to offer a network and plan design with the goal of delivering overall value based on the price, accessibility and administrative services provided to
clients and their members.

SEASONALITY

We have also historically experienced sales volume fluctuations by quarter due to seasonality associated with the sale of sunglasses, which represented
49.8 percent and 48.5 percent of our sales in 2010 and 2009, respectively. As a result, our net sales are typically higher in the second quarter, which includes increased sales to
wholesale customers and increased sales in our Sunglass Hut stores, and lower in the first quarter, as sunglass sales are lower in the cooler climates of North America, Europe and Northern Asia. These
seasonal variations could affect the comparability of our results from period to period. Our retail fiscal year is either a 53-week year or a 52-week year, which also can
affect the comparability of our results from period to period. When a 53-week year occurs, we generally add the extra week to the fourth quarter. In 2008, the fiscal year for the Retail
Division in North America and the United Kingdom included 53 weeks; in 2009, the fiscal year for the Retail Division in Asia-Pacific, Greater China (mainland China and Hong Kong)
and South Africa included 53 weeks. A 53-week year occurs in five- to six-year intervals and will occur again in fiscal 2014 in North America and the United
Kingdom and in fiscal 2015 in Asia-Pacific, Greater China and South Africa.

ORGANIZATIONAL STRUCTURE

We are a holding company, and the majority of our operations are conducted through our wholly-owned subsidiaries. We operate in two industry segments:
(i) manufacturing and wholesale distribution; and (ii) retail distribution. In the retail segment, we primarily conduct our operations through LensCrafters, Sunglass Hut, Pearle Vision,
Cole Licensed Brands and OPSM. In the manufacturing and wholesale distribution segment, we operate through 11 manufacturing plants and 42 geographically-oriented wholesale distribution subsidiaries.
See "Distribution" for a breakdown of the geographic regions.

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The
significant subsidiaries controlled by Luxottica Group S.p.A., including holding companies, are:

Country of Incorporation

Percentage of OwnershipSubsidiaryManufacturingLuxottica S.r.l.

Italy


100
%Luxottica Tristar (Dongguan) Optical Co., Ltd.

China


100
%DistributionLuxottica USA LLC

United States


100
%Luxottica Retail North America Inc.(1)

United States


100
%Sunglass Hut Trading, LLC

United States


100
%OPSM Group Pty Limited

Australia


100
%Luxottica Trading and Finance Limited

Ireland


100
%Holding companiesLuxottica U.S. Holdings Corp.

United States


100
%Luxottica South Pacific Holdings Pty Limited

Australia


100
%Luxottica South Pacific Pty Limited

Australia


100
%Luxottica (China) Investment Co. Ltd.

China


100
%Oakley, Inc.(2)

United States


100
%Arnette Optic Illusions, Inc.

United States


100
%The United States Shoe Corporation

United States


100
%


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Table of Contents

PROPERTY, PLANT AND EQUIPMENT

Our corporate headquarters is located at Via C. Cantù 2, Milan 20123, Italy. Information regarding the location, use and approximate size of our
principal offices and facilities as of March 31, 2011 is set forth below:

Location

Use

Owned/Leased

Approximate
Area in Square
FeetMilan, Italy

Corporate headquarters

Owned


70,863Agordo, Italy(1)

Administrative offices and manufacturing facility

Owned


926,200Mason (Ohio), United States

North American retail division headquarters

Owned


415,776Atlanta (Georgia), United States

North American distribution center

Owned


183,521Port Washington (NY), United States

U.S. corporate and wholesale headquarters and wholesale division

Owned


140,700Foothill Ranch/Lake Forest (CA), United States(2)

Oakley headquarters, manufacturing facility and ophthalmic laboratory

Owned


678,017Ontario (CA), United States

Oakley eyewear, apparel and footwear distribution centers

Leased


408,000Dayton (NV), United States

Oakley manufacturing facility

Owned


63,000Macquarie Park, Australia

Offices

Leased


61,496Revesby, Australia

Distribution center

Leased


61,054Cincinnati (Ohio), United States

Warehouse, distribution center

Leased


132,000Dallas (Texas), United States

Ophthalmic laboratory, distribution center, office

Leased


128,869Memphis (Tennessee), United States

Ophthalmic laboratory

Leased


59,350Columbus (Ohio), United States

Ophthalmic laboratory, distribution center

Leased


121,036Knoxville (Tennessee), United States

Ophthalmic laboratory

Leased


38,500St. Albans (Hertfordshire), UK

Offices

Leased


15,600Dongguan, China(1)(3)

Office, manufacturing facility, land and dormitories

Leased


3,093,465Shanghai, China

Offices, fitting laboratory

Leased


23,180Tokyo, Japan

Japan corporate headquarters

Leased


7,807Bhiwadi, India(4)

Manufacturing facility, administrative offices

Leased


343,474Rovereto, Italy

Frame manufacturing facility

Owned


228,902Sedico, Italy(1)

Distribution center

Owned


392,312Cencenighe, Italy

Semi-finished product manufacturing facility

Owned


59,892Lauriano, Italy

Frame and crystal lenses manufacturing facility

Owned


292,078Pederobba, Italy(1)(5)

Frame manufacturing facility

Owned


191,722Sedico, Italy(1)

Frame manufacturing facility

Owned


342,830Izmir, Turkey

Turkish headquarters, offices, warehouse and frame manufacturing facility

Leased


92,750Dublin, Ireland

Offices

Leased


6,650Winnipeg, Canada

Ophthalmic laboratory, warehouse, distribution center

Leased


21,687


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Substantially
all of our retail stores are leased. See "DistributionRetail Distribution" above for more information about our retail locations
and a breakdown of the geographic regions. All of our leases expire between 2011 and 2025 and have terms that we believe are generally reasonable and reflective of market conditions.

We
believe that our current facilities (including our manufacturing facilities) are adequate to meet our present and reasonably foreseeable needs. There are no encumbrances on any of our
principal owned properties.

ITEM 4A.    UNRESOLVED STAFF COMMENTS

None.

ITEM 5.    OPERATING AND
FINANCIAL REVIEW AND PROSPECTS

Overview

We operate in two industry segments: (i) manufacturing and wholesale distribution; and (ii) retail distribution. Through our manufacturing and
wholesale distribution segment, we are engaged in the design, manufacture, wholesale distribution and marketing of house brand and designer lines of mid- to premium-priced prescription
frames and sunglasses and, through Oakley, of performance optics products. We operate in our retail segment principally through our retail brands, which include, among others, LensCrafters, Sunglass
Hut, Pearle Vision, ILORI, The Optical Shop of Aspen, OPSM, Laubman & Pank, Budget Eyewear, Bright Eyes, Oakley "O" Stores and Vaults, David Clulow, and our Licensed Brands (Sears Optical and
Target Optical). As of December 31, 2010, the retail segment consisted of 5,824 corporate-owned retail locations and 526 franchised or licensed locations as follows:

North
America

Asia-
Pacific

China/
Hong Kong



Africa and
Middle East

South
Africa

Central and
South AmericaEurope

TotalLensCrafters


964





191














1,155Pearle Vision


370




















370Sunglass Hut(1)


1,778


265


5


65





116





2,229Ilori and The Optical Shop of Aspen


48




















48Oliver Peoples


6




















6Oakley retail locations(2)


122


20





14








4


160Sears Optical


824




















824Target Optical


322




















322OPSM(3)





403

















403Laubman & Pank





76

















76Budget Eyewear





107

















107Bright Eyes





52

















52David Clulow(4)











72











72Franchised or licensed locations(5)


369


115





10


29





3


5264,803


1,038


196


161


29


116


7


6,350


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LensCrafters,
ILORI, Pearle Vision, our Licensed Brands (Sears Optical and Target Optical), Oakley (Oakley "O" Stores and Vaults), Sunglass Icon, The Optical Shop of
Aspen and Oliver Peoples have retail distribution operations located throughout the United States, Canada and Puerto Rico, while OPSM, Laubman & Pank, Budget Eyewear and Bright Eyes operate
retail outlets located in Australia and New Zealand. Sunglass Hut is a leading retailer of sunglasses worldwide based on sales. In 2006, we began operating retail locations in mainland China and
currently we have rebranded the acquired stores to our premium LensCrafters brand in mainland China and Hong Kong. In 2008, we acquired David Clulow, a premium optical retailer operating in the United
Kingdom and Ireland. Our net sales consist of direct sales of finished products manufactured with our own brand names or our licensed brands to opticians and other independent retailers through our
wholesale distribution channel and sales directly to consumers through our retail division.

Demand
for our products, particularly our higher-end designer lines, is largely dependent on the discretionary spending power of the consumers in the markets in which we
operate. See Item 3"Key InformationRisk FactorsIf we do not correctly predict future economic conditions and changes in consumer preferences, our sales of
premium products and profitability will suffer." We have also historically experienced sales volume fluctuations by quarter due to seasonality associated with the sale of sunglasses. As a result, our
net sales are typically higher in the second quarter and lower in the first quarter.

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 from an average exchange rate of
Euro 1.00 = U.S. $1.4707 in 2008 to Euro 1.00 = U.S. $1.3947 in 2009 to Euro 1.00 = U.S. $1.3207 in 2010. Additionally, with the acquisition of OPSM and
Bright Eyes (acquired through Oakley), our results of operations have been rendered susceptible to currency fluctuations between the Euro and the Australian dollar. 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. See
Item 11"Quantitative and Qualitative Disclosures About Market RiskForeign Exchange Sensitivity" and Item 3"Key InformationRisk
FactorsIf the Euro or the Chinese Yuan strengthens relative to certain other currencies or if the U.S. dollar weakens relative to the Euro, our profitability as a consolidated group will
suffer."

Critical Accounting Policies and Estimates

Beginning with the fiscal year ended December 31, 2010, we have changed the basis of our accounting from accounting principles generally accepted in the
United States (U.S. GAAP) to IFRS as issued by the IASB. IFRS varies in certain significant respects from U.S. GAAP. For further details regarding key differences, see Note 34 to
our Consolidated Financial Statements included in Item 18 of this annual report.

We
prepare our consolidated financial statements in accordance with IFRS, which require management to make estimates, judgments and assumptions that affect the amounts reported in the
consolidated financial statements and the accompanying notes. We believe that our most critical accounting policies and estimates relate to the following:



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Revenue Recognition

Revenues include sales of merchandise (both wholesale and retail), insurance and administrative fees associated with the Company's
managed vision care business, eye exams and related professional services and sales of merchandise to franchisees, along with other revenues from franchisees such as royalties based on sales and
initial franchise fee revenues.

Revenue
is recognized when (a) the significant risks and rewards of the ownership of goods are transferred, (b) neither continuing managerial involvement to a degree
usually associated with
ownership nor effective control over the goods sold is retained by the Company, (c) the amount of revenue can be measured reliably, (d) it is probable that the economic benefits
associated with the transaction will flow to the Company and (e) the costs incurred or to be incurred in respect of the transaction can be measured reliably.

In
some countries, the wholesale and retail divisions offer the customer the right to return products for a limited period of time after the sale. However, such right of return does not
impact the timing of revenue recognition as all conditions of International Accounting Standards ("IAS") 18,Revenue, are satisfied at the date of sale.
We have estimated and accrued for the amounts to be returned in the subsequent period. This estimate is based on our right of return policies and practices along with historical data, sales trends and
the timing of returns from the original transaction date when applicable. Changes to these policies and practices or a change in the trend of returns could lead to actual returns being different from
the amounts estimated and accrued.

Also
included in retail division revenues are managed vision care revenues consisting of (i) insurance revenues which are recognized when earned over the terms of the respective
contractual relationships and (ii) administrative services revenues which are recognized when services are provided during the contract period. Accruals are established for amounts due under
these relationships based on an estimate of uncollectible amounts. Our insurance contracts require us to estimate the potential costs and exposures over the life of the agreement such that the amount
charged to the customers will cover these costs. To mitigate the exposure risk, these contracts are usually short-term in nature. However, if we do not accurately estimate the future
exposure and risks associated with these contracts, we may suffer losses as we would not be able to cover our costs incurred with revenues from the customer.

Income Taxes

Income taxes are recorded in accordance with IAS 12,Income Taxes, which
requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in our consolidated financial statements or tax returns. Under
this method, deferred tax liabilities and assets are determined based on the difference between the consolidated financial statement and tax basis of assets and liabilities using the tax rates that
are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates that have been enacted or substantially enacted by the end of the reporting period. These
estimated tax rates and the deferred tax assets and liabilities recorded are based on information available at the time of calculation. This information is subject to change due to subsequent tax
audits performed by different taxing jurisdictions and changes in corporate structure not contemplated at the time of calculation, as well as various other factors.

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Inventories

Our manufactured inventories were approximately 58.2 percent of total frame inventory for each of 2010 and 2009. All inventories
at December 31, 2010 were valued using the lower of cost, as determined under an average annual cost by product line method, or market. Inventories are recorded net of allowances for possible
losses. These reserves are calculated using various factors including sales volume, historical shrink results, changes in market conditions and current trends. In addition, production schedules are
made on similar factors which, if not estimated correctly, could lead to the production of potentially obsolete inventory. As such, actual results could differ significantly from the estimated
amounts.

Goodwill and Other Intangible Assets and Impairment of Long-Lived Assets

In connection with various acquisitions, we have recorded as intangible assets certain goodwill, trade names and certain other
identifiable intangibles. At December 31, 2010, the aggregate carrying value of intangibles, including goodwill, was approximately Euro 4.0 billion or approximately
52 percent of total assets.

As
acquisitions are an important element of our growth strategy, valuations of the assets acquired and liabilities assumed on the acquisition dates could have a significant impact on our
future results of operations. Fair values of those assets and liabilities on the date of the acquisition could be based on estimates of future cash flows and operating conditions for which the actual
results may vary significantly. This may lead to, among other items, impairment charges and payment of liabilities different than amounts originally recorded, which could have a material impact on
future operations. In addition, IFRS 3 Revised,Business Combinations, applicable for Luxottica starting from January 1, 2010, requires us
to expense acquisition-related expenses as incurred and not include them in the purchase price allocation, and to separate contingent liabilities into two categories, contractual and
non-contractual, and account for them based on which category the contingency falls into. Since we participate in business combinations, we believe this statement could have a significant
effect on future results of operations.

Goodwill
and intangible assets deemed to have an indefinite life are no longer amortized, but rather are tested for impairment annually and, under certain circumstances, between annual
periods. An impairment charge will be recorded if the fair value of goodwill and other intangible assets is less than the carrying value. The calculation of fair value may be based on, among other
items, estimated future cash flows if quoted market prices in active markets are not available. We test our goodwill for impairment annually as of December 31 of each year and any other time a
condition arises that may cause us to believe that an impairment has occurred. Since impairment tests use estimates of the impact of future events, actual results may differ and we may be required to
record an impairment in future years. We recorded an impairment loss of Euro 20.4 million, Euro 0 million and Euro 0 million in 2010, 2009 and 2008,
respectively. For further details, see Note 10 to our Consolidated Financial Statements included in Item 18 of this annual report.

Intangibles
subject to amortization based on a finite useful life continue to be amortized on a straight-line basis over their useful lives. Our long-lived
assets, other than goodwill, are tested for impairment whenever events or changes in circumstances indicate that the net carrying amount may not be recoverable. When such events occur, we measure
impairment by comparing the carrying value of the long-lived asset to its recoverable amount, which is equal to its value in use. The value-in-use calculation
involves discounting the expected cash flows to be generated by the asset to its present value. If the sum of the expected discounted future cash flows is less than the carrying amount of the assets,
we would recognize an impairment loss, if determined to be necessary. Actual results may differ from our current estimates.

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Recent Accounting Pronouncements

See Note 2 to our Consolidated Financial Statements included in Item 18 of this annual report for a discussion of the impact of recent accounting
pronouncements on our financial condition and results of operations, including the expected dates of adoption and estimated effects on our financial position, statement of cash flows and results of
operations.

Overview of 2010 Results of Operations

In fiscal year 2010, we achieved strong growth of net sales and a more than proportionate increase in profitability relative to sales growth, as well as a
significant improvement in financial leverage. Both divisions made a major contribution to these results.

Because
of our worldwide operations, our results of operations are affected by foreign exchange rate fluctuations. In 2010, the strengthening of the main currencies in which we conduct
business, in particular of the U.S. dollar and the Australian dollar, against the Euro, which is our reporting currency, increased net sales by Euro 341.4 million, primarily in the
retail distribution segment.

This
discussion should be read in conjunction with Item 3"Key InformationRisk Factors" and the consolidated financial statements and the related notes
attached thereto included in Item 18.

Results of Operations

The following table sets forth, for the periods indicated, the percentage of net sales represented by certain items included in our statements of consolidated
income:

2010(2)

2009(1)

2008Net Sales


100.0
%

100.0
%

100.0
%Cost of Sales


34.3


34.6


33.6Gross Profit


65.7


65.4


66.4Operating Expenses:Selling and Advertising


40.8


41.3


41.2General and Administrative


12.6


12.9


11.1Total


53.4


54.2


52.3Income from Operations


12.3


11.2


14.1Other Income (Expense)-Net


(1.8
)

(2.1
)

(2.8
)Provision for Income Taxes


(3.8
)

(3.1
)

(3.7
)Net Income from Continuing Operations


6.7


6.0


7.6Discontinued Operations


0.3





Net Income


7.0


6.0


7.6Net Income Attributable to Non-Controlling Interest


0.1


0.1


0.1Net Income Attributable to Luxottica Group Stockholders


6.9


5.9


7.5


For
additional financial information by operating segment and geographic region, see Note 4 to our Consolidated Financial Statements included in Item 18 of this annual
report.

Throughout
the comparison of the fiscal year ended December 31, 2010 to the fiscal year ended December 31, 2009, we use 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

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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. For further information regarding the use of and limitations relating to such non-IFRS measures, please refer to the "Non-IFRS Measures: Adjusted
Measures" discussion following the year-over-year comparison.

Comparison of the fiscal year ended December 31, 2010 to the fiscal year ended December 31, 2009 Net Sales.

Net sales increased by Euro 703.7 million, or 13.8 percent, to Euro 5,798.0 million in 2010 from
Euro 5,094.3 million in 2009. Euro 281.1 million of such increase was attributable to the increased sales in the manufacturing and wholesale distribution segment in 2010 as
compared to 2009 and to increased sales in the retail distribution segment of Euro 422.6 million for the same period.

Net
sales for the retail distribution segment increased by Euro 422.6 million, or 13.5 percent, to Euro 3,561.6 million in 2010 from
Euro 3,139.0 million in 2009. The increase in net sales for the period was partially attributable to a 4.4 percent improvement in comparable store sales, which 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. In particular, we saw a 6.7 percent increase in comparable store sales for the North American
retail operations, which was partially offset by a 10.6 percent decrease in comparable store sales for the Australian/New Zealand retail operations. The positive effects from currency
fluctuations between the Euro, which is our reporting currency, and 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 237.2 million.

Net
sales to third parties in the manufacturing and wholesale distribution segment increased by Euro 281.1 million, or 14.4 percent, to
Euro 2,236.4 million in 2010 from Euro 1,955.3 million in 2009. This increase was mainly attributable to increased sales of most of our house brands, in particular
Ray-Ban and Oakley, and of some designer brands such as Chanel, Ralph Lauren and Bvlgari. These sales volume increases occurred in most of the geographic markets in which the Group
operates. These positive effects were further increased by positive currency fluctuations, in
particular a strengthening of the U.S. dollar and Australian dollar and other minor currencies, including but not limited to the Brazilian Real, the Canadian dollar and the Japanese Yen, which
increased net sales to third parties in the manufacturing and wholesale distribution segment by Euro 104.1 million.

In
2010, net sales in the retail distribution segment accounted for approximately 61.4 percent of total net sales, as compared to approximately 61.6 percent of total net
sales in 2009.

In
2010 and 2009, net sales in our retail distribution segment in the United States and Canada comprised 82.6 percent of our total net sales in this segment. In U.S. dollars,
retail net sales in the United States and Canada increased by 7.9 percent to U.S. $3,900.3 million in 2010 from U.S. $3,614.5 million in 2009, due to sales volume increases.
During 2010, net sales in the retail distribution segment in the rest of the world (excluding the United States and Canada) comprised 17.4 percent of our total net sales in the retail
distribution segment and increased by 13.2 percent to Euro 619.6 million in 2010 from Euro 547.3 million, or 17.4 percent of our total net sales in the retail
distribution segment, in 2009, mainly due to positive currency fluctuation effects.

In
2010, net sales to third parties in our manufacturing and wholesale distribution segment in Europe were Euro 1,059.9 million, comprising 47.4 percent of our total
net sales in this segment, compared to Euro 977.9 million, or 50.0 percent of total net sales in the segment, in 2009. The increase in net sales in Europe of
Euro 82.0 million in 2010 as compared to 2009 constituted a 8.4 percent increase in net sales to third parties, due to a general increase in consumer demand. Net sales to third
parties in our manufacturing and wholesale distribution segment in the United States and Canada were U.S.

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$715.8 million
and comprised 24.1 percent of our total net sales in this segment in 2010, compared to U.S. $664.9 million, or 24.4 percent of total net sales in the segment
in 2009. The increase in net sales in the United States and Canada of U.S. $50.9 million, or 7.7 percent, in 2010 compared to 2009, was primarily due to a general increase in consumer
demand. In 2010, net sales to third parties in our manufacturing and wholesale distribution segment in the rest of the world were Euro 636.5 million, comprising 28.5 percent of
our total net sales in this segment, compared to Euro 500.7 million, or 25.6 percent of our net sales in this segment, in 2009. The increase of Euro 135.9 million,
or 27.1 percent, in 2010 as compared to 2009, was due to the positive effect of currency fluctuations as well as an increase in consumer demand.

Cost of Sales.Cost of sales increased by Euro 227.6 million, or 12.9 percent, to
Euro 1,990.2 million in 2010
from Euro 1,762.6 million in 2009, essentially in line with the increase of net sales in the period. As a percentage of net sales, cost of sales was at 34.3 percent and
34.6 percent in 2010 and 2009, respectively. In 2010, the average number of frames produced daily in our facilities increased to
approximately 235,000 as compared to approximately 208,000 in 2009, which was attributable to increased production in all manufacturing facilities in response to an overall increase in demand.

Gross Profit.Our gross profit increased by Euro 476.1 million, or 14.3 percent, to
Euro 3,807.8 million in 2010
from Euro 3,331.7 million in 2009. As a percentage of net sales, gross profit was at 65.7 percent and 65.4 percent in 2010 and 2009, respectively, due to the factors noted
above.

Operating Expenses.Total operating expenses increased by Euro 335.0 million, or
12.1 percent, to
Euro 3,095.7 million in 2010 from Euro 2,760.6 million in 2009, in line with the increase of net sales in the period. As a percentage of net sales, operating expenses
decreased to 53.4 percent in 2010 from 54.2 percent in 2009.

Selling
and advertising expenses (including royalty expenses) increased by Euro 263.6 million, or 12.5 percent, to Euro 2,368.0 million in 2010 from
Euro 2,104.4 million in 2009. Selling expenses increased by Euro 204.7 million, or 12.1 percent. Advertising expenses increased by Euro 59.9 million,
or 19.2 percent. Royalties decreased by Euro 1.0 million, or 1.0 percent. As a percentage of net sales, selling and advertising expenses decreased to 40.8 percent in
2010, compared to 41.3 percent in 2009, mainly due to the increase in net sales in relation to the fixed portion of selling expenses, such as occupancy costs and fixed employee selling costs.

General
and administrative expenses, including intangible asset amortization, increased by Euro 71.4 million, or 10.9 percent, to Euro 727.7 million in
2010 as compared to Euro 656.3 million in 2009, mainly due to currency fluctuation effects and to the impairment charge totaling approximately Euro 20 million on the
goodwill allocated to the Asia/Pacific retail segment.

Income from Operations.For the reasons described above, income from operations increased by
Euro 141.1 million, or
24.7 percent, to Euro 712.2 million in 2010 from Euro 571.1 million in 2009. As a percentage of net sales, income from operations increased to 12.3 percent in
2010 from 11.2 percent in 2009. Adjusted income from operations increased by Euro 161.5 million, or 28.3 percent, to Euro 732.6 million in 2010 from
Euro 571.1 million in 2009. As a percentage of net sales, adjusted income from operations increased to 12.6 percent in 2010 from 11.2 percent in 2009. A reconciliation of
adjusted income from operations, a non-IFRS measure, to income from operations, the most directly comparable IFRS measure, is presented in the table below. For a further discussion of such
non-IFRS measures, please refer to the "Non-IFRS Measures: Adjusted Measures" discussion following this year-over-year comparison.

(Amounts in millions of Euro)

2010

2009Income from operations


712.2


571.1>Adjustment for goodwill impairment loss


20.4


Adjusted income from operations


732.6


571.1


Other Income (Expense)Net.Other income (expense)net was Euro (106.6)
million in 2010 as compared to Euro (106.3) million in 2009. Interest expense was Euro 107.0 million in 2010 as compared to Euro 109.1 million in 2009. Net interest expense
was Euro 98.5 million in 2010 as compared to Euro 102.2 million in 2009.

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Net Income.Income before taxes increased by Euro 140.8 million, or 30.3 percent, to
Euro 605.5 million in 2010
from Euro 464.8 million in 2009, for the reasons described above. As a percentage of net sales, income before taxes increased to 10.4 percent in 2010 from 9.1 percent in
the same period of 2009. Net income attributable to non-controlling interests decreased to Euro 5.1 million in 2010 as compared to Euro 5.8 million in 2009.
Discontinued operations were Euro 19.9 million and related to certain contingent liabilities originally recorded as part of the sale of our Things Remembered retail business in 2006,
which either settled or expired.

Our
effective tax rate was 36.0 percent and 34.4 percent in 2010 and 2009, respectively. Adjusted income before taxes increased by Euro 161.2 million, or
34.7 percent, to Euro 626.0 million in 2010 from Euro 464.8 million in 2009, for the reasons described above. As a consequence, the adjusted effective tax rate was
34.9 percent in 2010 as compared to 34.4 percent in 2009. A reconciliation of adjusted income before taxes, a non-IFRS measure, to income before taxes, the most directly
comparable IFRS measure, is presented in the table below. For a further discussion of such non-IFRS measures, please refer to the "Non-IFRS Measures:
Adjusted Measures" discussion following this year-over-year comparison.

(Amounts in millions of Euro)

2010

2009Income before taxes


605.6


464.8> Adjustment for goodwill impairment loss


20.4


Adjusted income before taxes


626.0


464.8


Net
income attributable to Luxottica Group stockholders increased by Euro 103.1 million, or 34.5 percent, to Euro 402.2 million in 2010 from
Euro 299.1 million in 2009. Net income attributable to Luxottica Group stockholders as a percentage of net sales increased to 6.9 percent in 2010 from 5.9 percent in 2009.
Adjusted net income attributable to Luxottica Group stockholders increased by Euro 103.6 million, or 34.6 percent, to Euro 402.7 million in 2010 from
Euro 299.1 million in 2009. Adjusted net income attributable to Luxottica Group stockholders as a percentage of net sales increased to 6.9 percent in 2010 from 5.9 percent
in 2009. A reconciliation of adjusted net income attributable to Luxottica Group stockholders, a non-IFRS measure, to net income attributable to Luxottica Group stockholders, the most
directly comparable IFRS measure, is presented in the table below. For a further discussion of such non-IFRS measures, please refer to the "Non-IFRS Measures: Adjusted
Measures" discussion following this year-over-year comparison.

(Amounts in millions of Euro)

2010

2009Net income attributable to Luxottica Group stockholders


402.2


299.1> Adjustment for goodwill impairment loss


20.4


> Adjustment for discontinued operations


(19.9
)

Adjusted net income attributable to Luxottica Group stockholders


402.7


299.1


Basic
earnings per share from continuing operations were Euro 0.83 in 2010 as compared to Euro 0.65 in 2009. Basic earnings per share were Euro 0.88 in 2010 as
compared to Euro 0.65 in 2009. Diluted earnings per share from continuing operations were Euro 0.83 in 2010 as compared to Euro 0.65 in 2009. Diluted earnings per share were
Euro 0.87 in 2010 as compared to Euro 0.65 in 2009. Adjusted basic earnings per share were Euro 0.88 in 2010 as compared to Euro 0.65 in 2009. Adjusted diluted earnings per
share were Euro 0.87 in 2010 as compared to Euro 0.65 in 2009. A reconciliation of adjusted basic earnings per share and adjusted diluted earnings per share, both non-IFRS
measures, to basic earnings per share and diluted earnings per share, their most directly comparable IFRS measures, respectively, is presented in the table below. For a further discussion of such
non-IFRS measures, please

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refer
to the "Non-IFRS Measures: Adjusted Measures" discussion following this year-over-year comparison.

Amounts in Euro

2010

2009Basic earnings per share


0.88


0.65> Adjustment for goodwill impairment loss





> Adjustment for discontinued operations





Adjusted basic earnings per share


0.88


0.65




Amounts in Euro

2010

2009Diluted earnings per share


0.87


0.65> Adjustment for goodwill impairment loss





> Adjustment for discontinued operations





Adjusted diluted earnings per share


0.87


0.65


Non-IFRS Measures: Adjusted Measures

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
order to provide a supplemental comparison of current period results of operations to prior periods, certain measures, such as income from operations, income before taxes, net income
attributable to Luxottica Group stockholders, basic earnings per share and diluted earnings per share, have been adjusted by excluding, if applicable, the following items related to
non-recurring transactions:



The
Company believes that these adjusted measures are useful to both management and investors in evaluating the Company's operating performance compared with that of other companies in
its industry because they exclude the impact of non-recurring items that are not relevant to the Company's operating performance.

The
adjusted measures referenced above are not measures of performance in accordance with IFRS. We include these adjusted comparisons in this presentation in order to provide a
supplemental view of operations that excludes items that are unusual, infrequent or unrelated to our ongoing core operations.

These
adjusted 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 the operational performance of the Company. The Company cautions that these
adjusted 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 these adjusted measures may differ from methods used by other companies.

The
Company recognizes that there are limitations in the usefulness of adjusted comparisons due to the subjective nature of items excluded by management in calculating adjusted
comparisons. We

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compensate
for the foregoing limitation by using these adjusted measures as a comparative tool, together with IFRS measurements, to assist in the evaluation of our operating performance.

See
the tables on the foregoing pages for a reconciliation of the adjusted measures discussed above to their most directly comparable IFRS financial measures.

Comparison of the fiscal year ended December 31, 2009 to the fiscal year ended December 31, 2008

Net Sales.Net sales decreased by Euro 107.3 million, or 2.1 percent, to
Euro 5,094.3 million in 2009 from
Euro 5,201.6 million in 2008. Euro 137.2 million of such decrease is attributable to the decreased sales of the manufacturing and wholesale distribution segment in 2009 as
compared to the same period in 2008, which was partially offset by the increase in the retail distribution segment of Euro 29.9 million. The decrease in sales in the manufacturing and
wholesale distribution segment was mainly attributable to decreased sales of most of our designer brands, which was partially offset by increased sales of our Ray-Ban and Oakley brands.
The increase in sales in the retail distribution segment includes positive effects from currency fluctuations between the Euro, which is our reporting currency, and other currencies in which we
conduct business, in particular due to a stronger U.S. dollar compared to the Euro. The favorable exchange rate fluctuations increased net sales by Euro 124.3 million, primarily in the
retail distribution segment.

In
2008, the fiscal year for the retail distribution segment in North America included 53 weeks; in 2009, the fiscal year for the retail distribution segments in Asia Pacific,
China and South Africa included 53 weeks. On a comparable basis, i.e., adjusted for the additional week of sales in 2008 and 2009, net sales in 2009 decreased by
Euro 68.9 million or 1.3 percent, to Euro 5,086.7 million in 2009 as compared to Euro 5,155.6 million in 2008. The table below sets forth the impact on
our net sales of the additional week of sales in 2008 and 2009:

Net SalesTotal GroupAmount in millions of Euro

2009

2008

DifferenceNet Salesas reported


5,094.3


5,201.6


(2.1
)%Additional week of sales


(7.6
)

(46.0
)Net Salesas adjusted


5,086.7


5,155.6


(1.3
)%


Net
sales for the retail distribution segment increased by Euro 29.9 million, or 1.0 percent, to Euro 3,139.0 million in 2009 from
Euro 3,109.1 million in 2008. The increase in net sales for the period is attributable to the strengthening of the U.S. dollar against the Euro, which increased net sales for the period
by Euro 124.3 million. This increase was partially offset by a 4.8 percent decrease in comparable store sales for the North American retail operations.

On
a comparable basis, i.e., adjusted for the additional week of sales, net sales in 2009 in the retail distribution segment increased by Euro 68.1 million, or
2.2 percent, to Euro 3,131.3 million in 2009, as compared to Euro 3,063.2 million in 2008. The table below sets forth the impact on our net sales of the additional
week of sales in 2008 and 2009:

Net salesRetailAmount in millions of Euro

2009

2008

DifferenceNet Salesas reported


3,139.0


3,109.1


1.0
%Additional week of sales


(7.6
)

(46.0
)Net salesas adjusted


3,131.3


3,063.2


2.2
%


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Net
sales to third parties in the manufacturing and wholesale distribution segment decreased by Euro 137.2 million, or 6.6 percent, to
Euro 1,955.3 million in 2009 from Euro 2,092.5 million in 2008. This decrease is mainly attributable to decreased sales of most of our designer brands, which were partially
offset by increased sales of our Ray-Ban and Oakley brands. These sales volume decreases occurred in almost all of our key markets, with the exception of France and Brazil. These negative
effects were partially offset by positive currency fluctuations, in particular due to a stronger U.S. dollar compared to the Euro, which caused an increase in net sales to third parties in the
manufacturing and wholesale distribution segment of Euro 5.0 million.

In
2009, net sales in the retail distribution segment accounted for approximately 61.6 percent of total net sales, as compared to approximately 59.8 percent of total net
sales for 2008. This increase in sales as a percentage of total net sales for the retail distribution segment is primarily attributable to: (i) a 6.6 percent decrease in net sales to
third parties in our manufacturing and wholesale distribution segment compared to 2008; and (ii) positive currency exchange rate effects, which more heavily
impacted net sales for the retail distribution segment because of the heavy concentration of our retail business in North America, where the Euro is not the functional currency.

In
2009, net sales to third parties in our manufacturing and wholesale distribution segment in Europe was Euro 977.9 million, comprising 50.0 percent of our total
net sales in this segment, compared to Euro 1,067.9 million during 2008, or 51.0 percent of total net sales. The decrease of Euro 87.5 million in 2009 compared to
2008 constituted an 8.2 percent decrease in net sales to third parties in Europe, due to reductions in orders by wholesale customers responding to reduced consumer demand in this market as a
result of the global financial crisis. Net sales to third parties in our manufacturing and wholesale distribution segment in the United States and Canada were U.S. $664.9 million and comprised
24.4 percent of our total net sales in this segment in 2009, compared to U.S. $731.7 million in 2008, or 23.8 percent of total net sales. The decrease of U.S. $70.3 million
in 2009 compared to 2008 constituted a decrease, in U.S. dollars, of 9.6 percent in net sales in this segment in the United States and Canada, due to the global financial crisis that caused
reductions in orders by wholesale customers referred to above. In Euro, net sales in the United States and Canada decreased by 4.7 percent due to the strengthening of the U.S. dollar as
compared to the Euro. In 2009, net sales to third parties in our manufacturing and wholesale distribution segment in the rest of the world were Euro 500.7 million, comprising
25.6 percent of our total net sales in this segment, compared to Euro 527.1 million in 2008, or 25.2 percent of our net sales. The decrease of
Euro 26.4 million in 2009 compared to 2008 constituted a 5.0 percent decrease in this segment in the rest of the world due to the reductions in orders by wholesale customers
referred to above.

In
2009, net sales in our retail distribution segment in the United States and Canada comprised 82.6 percent of our total net sales in this segment as compared to
83.6 percent of our total net sales in 2008. In U.S. dollars, retail net sales in the United States and Canada decreased by 5.4 percent to U.S. $3,614.5 million in 2009 from U.S.
$3,822.3 million for 2008. In Euro, retail net sales in the United States and Canada decreased by only 0.3 percent to Euro 2,591.7 million in 2009 from
Euro 2,599.0 million in 2008, mainly due to the strengthening of the U.S. dollar compared to the Euro and the significant portion of the retail business that was generated in U.S.
dollars. During 2009, net sales in the retail segment in the rest of the world (excluding the United States and Canada) comprised 17.4 percent of our total net sales in the retail distribution
segment and constituted an increase of 7.3 percent to Euro 547.3 million in 2009 from Euro 510.1 million for 2008.

Cost of Sales.Cost of sales increased by Euro 14.0 million, or 0.8 percent, to
Euro 1,762.6 million in 2009 from
Euro 1,748.6 million in 2008. As a percentage of net sales, cost of sales increased to 34.6 percent in 2009, as compared to 33.6 percent in 2008, mainly due to the impact
of fixed costs on declining volumes. In 2009, the average number of frames produced daily in our facilities decreased to approximately 207,700, as compared to 213,100 in 2008, which was attributable
to decreased production in the Italian manufacturing facilities in response to the overall decrease in demand.

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Gross Profit.Our gross profit decreased by Euro 121.3 million, or 3.5 percent, to
Euro 3,331.7 million in 2009
from Euro 3,453.0 million in 2008. As a percentage of net sales, gross profit decreased to 65.4 percent in 2009 from 66.4 percent in 2008, due to the factors noted above
for cost of sales.

Operating Expenses.Total operating expenses increased by Euro 39.3 million, or
1.4 percent, to
Euro 2,760.6 million in 2009 from Euro 2,721.3 million in 2008. As a percentage of net sales, operating expenses increased to 54.2 percent in 2009 from
52.3 percent in 2008 primarily due to the increase in general and administrative expenses.

Selling
and advertising expenses (including royalty expenses) decreased by Euro 40.6 million, or 1.9 percent, to Euro 2,104.4 million in 2009 from
Euro 2,145.0 million in 2008, due to the decreases in advertising expenses of Euro 25.6 million and in royalty expenses of Euro 15.0 million mainly occurred
in the manufacturing and wholesale distribution segment due to the cost reduction effort put in place in response to the sales decrease. As a percentage of net sales, selling and advertising expenses
remained substantially flat at 41.3 percent in 2009 as compared to 41.2 percent in 2008.

General
and administrative expenses, including intangible asset amortization, increased by Euro 79.9 million, or 13.9 percent, to Euro 656.3 million in
2009 from Euro 576.4 million in 2008. The increase was mainly due to (i) the stock option expense of Euro 24.9 million in 2009 as compared to income related to stock
options of Euro 21.5 million in 2008 due to the change of the vesting period of certain stock option plans, (ii) certain cost savings realized in the retail distribution segment
in 2008 and (iii) non-recurring restructuring expenses incurred in 2009 by the retail distribution segment totaling Euro 7.4 million. As a percentage of net sales,
general and administrative expenses increased to 12.9 percent in 2009 compared to 11.1 percent for 2008.

Income from Operations.For the reasons described above, income from operations decreased by
Euro 160.6 million, or
21.9 percent, to Euro 571.1 million in 2009 from Euro 731.6 million in 2008. As a percentage of net sales, income from operations decreased to 11.2 percent in
2009 from 14.1 percent in 2008.

On
a comparable basis, i.e., adjusted for the additional week of sales in 2008 and 2009, for the non-recurring costs in the retail distribution segment resulting from
the 2009 personnel restructuring of Euro 7.4 million in 2009 and for the non-recurring income in 2008 of approximately Euro 8.0 million related to the
collection of an insurance claim, income from operations in 2009 decreased by Euro 137.6 million, or 19.3 percent, to Euro 575.9 million in 2009 as compared to
Euro 713.5 million in 2008. The table below sets forth the impact on our income from operations of the items described above:

Income from OperationsTotal GroupAmount in millions of Euro

2009

% of
Net Sales

2008

% of
Net Sales

Difference in
basis pointsIncome from Operationsas reported


571.1


11.2
%

731.6


14.1
%

(290
)Additional week of sales


(2.6
)




(10.1
)Non-recurring costs


7.4Insurance reimbursement








(8.0
)Income from Operationsas adjusted


575.9


11.3
%

713.5


13.8
%

(250
)


Other Income (Expense)Net.Other income (expense)net was Euro (106.3)
million in 2009 compared to Euro (143.3) million in 2008. Net interest expense decreased to Euro 102.2 million in 2009 compared to Euro 109.7 million in 2008, mainly
attributable to a decrease in interest rates on our outstanding floating interest rate indebtedness. OtherNet was Euro (4.1) million in 2009 as compared to Euro (33.5) million in 2008.
The decrease is mainly due to a write-off in 2008 of the financial receivable recorded upon the sale of Things Remembered totaling Euro (28.8) million.

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Net Income.Income before taxes decreased by Euro 123.6 million, or 21.0 percent, to
Euro 464.8 million in 2009
from Euro 588.4 million in 2008 for the reasons described above. As a percentage of net sales, income before taxes decreased to 9.1 percent in 2009 from 11.3 percent in
2008. Net income attributable to non-controlling interests decreased to Euro 5.8 million in 2009 from Euro 7.7 million in 2008. Our effective tax rate was
34.4 percent in 2009, compared to 32.4 percent in 2008.

Net
income attributable to Luxottica Group stockholders decreased by Euro 91.0 million, or 23.3 percent, to Euro 299.1 million in 2009 from
Euro 390.2 million in 2008 for the reasons described above. Net income attributable to Luxottica Group stockholders as a percentage of net sales decreased to 5.9 percent in 2009
from 7.5 percent in 2008.

Basic
and diluted earnings per share were Euro 0.65 in 2009 as compared to Euro 0.85 in 2008.

Taxes

Our effective tax rates for the fiscal years ended December 31, 2010, 2009 and 2008, were approximately 36.0 percent, 34.4 percent and
32.4 percent, respectively. For fiscal year 2008, the tax rates also include a reduction of almost 6.0 percent in the Italian statutory tax rates.

Liquidity and Capital Resources

Cash Flows

Operating Activities.The Company's net cash provided by
operating activities was
Euro 831.6 million, Euro 903.5 million and Euro 569.5 million for 2010, 2009 and 2008, respectively. The Euro 71.9 million decrease in 2010 as
compared to 2009 is mainly due to (i) the divestiture of the Group investment portfolio which resulted in an increase in cash provided by operating activities of approximately
Euro 23.5 million in 2009 and (ii) the stronger performance of certain components of working capital in 2009 as compared to 2010, as indicated below. The
Euro 334.0 million increase in 2009 as compared to 2008 was primarily attributable to stronger performance by the Group on all components of working capital.

Depreciation
and amortization were Euro 322.1 million in 2010 as compared to Euro 285.4 million in 2009 and Euro 264.5 million in 2008. The
increase in depreciation and amortization in 2010 as compared to 2009 is primarily attributable to a non-recurring impairment charge totaling approximately Euro 20 million.
The increase in depreciation expense in 2009 as compared to 2008 was primarily attributable to increased fixed assets due to the acquisition of new stores that occurred in 2008 and new investments
(mainly leasehold improvements) in the wholesale segment.

Non-cash
stock-based compensation expense was Euro 32.9 million in 2010 as compared to Euro 24.9 million in 2009 and Euro (21.5) million in 2008.
The increase in 2010 as compared to 2009 is mainly due to expense related to the new stock option plan granted in 2010 for approximately Euro 5.1 million. The income recorded in 2008 as
compared to expense recorded in 2009 and 2010 was primarily attributable to the change in the vesting period for the 2006
performance plans (income associated with these plans was Euro 28.9 million in 2008 as opposed to an expense of Euro 12.0 million in 2009 and
Euro 15.6 million in 2010).

The
change in accounts receivable was Euro (1.6) million in 2010 as compared to Euro 25.7 million in 2009 and Euro 27.9 million in 2008. This change in 2010
as compared to 2009 was primarily due to an increase in sales volume in 2010 as compared to 2009. The inventory change was Euro (36.5) million in 2010 as compared to Euro 46.7 million in
2009 and Euro 4.4 million in 2008. The change in 2010 as compared to 2009 was mainly due to increased production in our Chinese manufacturing facilities. The change in 2009 as compared
to 2008 was mainly due to the improvements in production planning that were implemented in 2008, which optimized inventory levels by more clearly aligning stock on hand and

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volumes
of sales. The change in prepaid/accrued expenses and other was Euro (21.1) million in 2010 as compared to Euro 180.0 million in 2009 and Euro (104.0) million in 2008. The change
in 2010 as compared to 2009 was mainly due to the timing of payments to tax authorities by certain U.S. subsidiaries of the Company which are expected to be utilized during the first half of 2011. The
change in 2009 as compared to 2008 is mainly due to the collection of certain U.S. tax receivables for approximately Euro 44.5 million (U.S. $62.0 million) and the utilization of
tax prepayments of Euro 57.8 million to offset the tax payments which came due during 2009. The change in accounts payable was Euro 86.7 million in 2010 as compared to
Euro 27.5 million in 2009 and Euro (33.1) million in 2008. The change in 2010 as compared to 2009 and 2008 was mainly due to better payment terms with the vendors in 2009, which
continued to show their positive effects in 2010 as well. The change in income tax payable was Euro 32.5 million in 2010 as compared to Euro (16.7) million in 2009 and
Euro 2.9 million in 2008. The change in 2010 as compared to 2009 was primarily attributable to higher taxable income in 2010 which resulted in an increase in the income tax payable as
compared to the same period of 2009. The change in 2009 as compared to 2008 was primarily attributable to the timing of our tax payments in different tax jurisdictions.

Investing Activities.The Company's net cash used in
investing activities was
Euro 367.3 million, Euro 229.3 million and Euro 304.7 million in 2010, 2009 and 2008, respectively. The increase in 2010 as compared to 2009 is mainly related
to business acquisitions that occurred in 2010 and accounted for a cash outflow of approximately Euro 121.8 million. The decrease of Euro 75.4 million in 2009 is mainly due
to the lower capital expenditures for the production sites in Italy and China, which were limited to those strictly necessary and related to the optimization of the production process.

Our
capital expenditures, excluding acquisitions, were Euro 230.4 million in 2010 as compared to Euro 200.4 million in 2009 and
Euro 296.4 million in 2008 primarily related to the investment in IT infrastructure in 2010 and 2009 and in each year to investment in manufacturing facilities for the manufacturing and
wholesale segment and the opening, remodeling and relocation of stores in the retail division. Capital expenditures were Euro 57.9 million in the three-month period ended
March 31, 2011. It is our expectation that 2011 net capital expenditures will be approximately Euro 280 million, not including investments for acquisitions. The Company will pay
for these future capital expenditures with its currently available borrowing capacity and available cash.

Net
cash provided by disposals of property, plant and equipment was insignificant in 2010, 2009 and 2008. Investments in equity investees resulted in cash used of
Euro 20.7 million in 2010 and Euro 21.3 million in 2009 and related to the acquisition of a 40 percent participation in Multiopticas Internacional S.L.

Financing Activities.The Company's net cash used in
financing activities was Euro (167.7) million,
Euro (373.5) million and Euro (201.5) million in 2010, 2009 and 2008, respectively. Cash used in financing activities in 2010 mainly related to the repayment of maturing outstanding debt and aggregate
dividend payments to stockholders of Euro 169.8 million. In 2009, cash used in financing activities mainly related to the repayment of maturing outstanding debt and aggregate dividend
payments to stockholders of Euro 103.5 million. Cash used in financing activities in 2008 mainly related to the repayment of maturing outstanding debt and aggregate dividend payments to
stockholders of Euro 231.5 million.

Our Indebtedness

We have relied primarily upon internally generated funds, trade credit, committed bank facilities and debt capital markets to finance
our operations and expansion. We do not typically raise capital through the issuance of stock; rather, we use debt financing to lower our overall cost of capital and increase our return on
shareholders' equity. We have access to capital markets at favorable market conditions and continue to monitor the debt capital markets in order to take appropriate actions to raise financing.

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We
manage our financing requirements by maintaining an adequate level of liquidity and committed and uncommitted financing facilities. To this end, we take a series of actions to ensure
compliance with these financing requirements. In particular:



Our
debt agreements contain certain covenants, including covenants that restrict our ability to incur additional indebtedness. We do not currently expect to require any additional
financing that would require us to obtain consents or waivers of any existing restrictions on additional indebtedness set forth in our debt agreements.

Our
long-term credit facilities contain certain financial covenants including ratios of Net Financial Position ("NFP") (as defined in the agreements) to EBITDA (earnings
before interest, taxes and depreciation as defined in the agreements) and EBITDA to net financial charges (as defined in the agreements). As of March 31, 2011 and December 31, 2010, we
were in compliance with these financial covenants and we expect to continue to be in compliance in the foreseeable future periods. We believe that after giving effect to any additional financing that
we may incur, such restrictions would not materially affect our compliance with these covenants, our ability to incur the additional debt or our future business operations.

The
financial and operating covenants included in the above long-term debt are as follows (such terms are defined in our applicable debt
agreements):



Our
total indebtedness was Euro 2,111.4 million as of December 31, 2010. Available additional borrowings under credit facilities as of such date were
Euro 1,434.8 million of which Euro 875 million were committed credit lines.

For
additional information, see Note 19 to our Consolidated Financial Statements included in Item 18 of this annual report.

Bank Overdrafts

Bank overdrafts represent negative cash balances held in banks and amounts borrowed under various unsecured short-term
lines of credit obtained by the Company and certain of its subsidiaries through local financial institutions. These facilities are usually short-term in nature or contain evergreen clauses
with a cancellation notice period. Certain of these subsidiaries' agreements require a guaranty from Luxottica Group S.p.A. Interest rates on these lines vary based on the country of borrowing,
among other factors. The Company uses these short-term lines of credit to satisfy its short-term cash needs.

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Our Credit Facilities



On June 3, 2004, we and our subsidiary U.S. Holdings entered into a credit facility with a group of banks providing for loans in
the aggregate principal amount of Euro 740 million and U.S. $325 million. The facility consists of three tranches (Tranche A, Tranche B
and Tranche C). On March 10, 2006, this agreement was amended to increase the available Tranche C borrowings to Euro 725 million, decrease the interest margin and
define a new maturity date of five years from the date of the amendment for Tranche B and Tranche C. In February 2008, we exercised an option included in the amendment to the term and
revolving facility to extend the maturity date of Tranches B and C to March 2013. Tranche A was a Euro 405 million amortizing term loan requiring repayment of nine equal
quarterly installments of principal of Euro 45 million beginning in June 2007, which was to be used for general corporate purposes, including the refinancing of our existing debt as it
matured. Tranche A expired on June 3, 2009 and was repaid in full. Tranche B is a term loan of U.S. $325 million which was drawn upon on October 1, 2004 by U.S.
Holdings to finance the purchase price for the acquisition of Cole National. Amounts borrowed under Tranche B will mature in March 2013. Tranche C is a revolving credit facility of
Euro 725 million-equivalent multi-currency (Euro/U.S. dollar). Amounts borrowed under Tranche C may be repaid and re-borrowed with all outstanding balances maturing in
March 2013. As of December 31, 2010, the line under Tranche C was undrawn by Luxottica Group S.p.A. We can select interest periods of one, two, three or six months with interest
accruing on Euro-denominated loans based on the corresponding EURIBOR rate and accruing on U.S. dollar-denominated loans based on the corresponding LIBOR rate, both plus a margin between
0.20 percent and 0.40 percent based on the "Net Debt/EBITDA" ratio, as defined in the agreement. The interest rate on December 31, 2010 was 0.589 percent for
Tranche B. As of December 31, 2010, Euro 243.2 million was borrowed under this credit facility. For additional information, see Note 19 to our Consolidated Financial
Statements included in Item 18 of this annual report.

During
the third quarter of 2007, we entered into thirteen interest rate swap transactions with an aggregate initial notional amount of U.S. $325 million with various banks
("Tranche B Swaps"). These swaps will expire on March 10, 2012. The Tranche B Swaps were entered into as a cash flow hedge on Tranche B of the credit facility discussed
above. The Tranche B Swaps exchange the floating rate of LIBOR for an average fixed rate of 4.62 percent per annum.



To finance the acquisition of Oakley, on October 12, 2007, we and our subsidiary Luxottica U.S. Holdings Corp. ("U.S. Holdings")
entered into two credit facilities with a group of banks providing for certain term loans and a short-term bridge loan for an aggregate principal amount of U.S. $2.0 billion. The
term loan facility is a term loan of U.S. $1.5 billion, with a five-year term, with options to extend the maturity on two occasions for one year each time. We exercised the first
option to extend the final maturity of this facility by one year to October 12, 2013. The term loan facility is divided into two facilities, Facility D and Facility E. Facility D consists of an
amortizing term loan in an aggregate amount of U.S. $1.0 billion, made available to U.S. Holdings, and Facility E consists of a bullet term loan in an aggregate amount of U.S.
$500 million. We borrowed U.S. $500 million under Facility E. Each facility has a five-year term, with options to extend the maturity on two occasions for one year each time.

The
term loan has a spread of between 20 and 40 basis points over LIBOR, depending on the Group's ratio of debt to EBITDA. Interest accrues on the term loan at LIBOR (as defined in the
agreement) plus 0.30 percent (0.589 percent for Facility D and 0.602 percent for Facility E on December 31, 2010). The final maturity of the credit facility is
October 12, 2013.

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During
the third quarter of 2007, we entered into ten interest rate swap transactions with an aggregate initial notional amount of U.S. $500 million with various banks
("Tranche E Swaps"). These swaps will expire on October 12, 2012. The Tranche E Swaps were entered into as a cash flow hedge on Facility E of the credit facility discussed above.
The Tranche E Swaps exchange the floating rate of LIBOR for an average fixed rate of 4.26 percent per annum.

During
the fourth quarter of 2008 and January 2009, we entered into 14 interest rate swap transactions with an aggregate initial notional amount of U.S. $700.0 million with
various banks which will start to decrease by U.S. $50.0 million every three months beginning on April 12, 2011 ("Tranche D Swaps"), which matches the scheduled maturity of the
hedged debt. These swaps will expire on October 12, 2012. The Tranche D Swaps were entered into as a cash flow hedge on Facility D of the credit facility discussed above. The
Tranche D Swaps exchange the floating rate of LIBOR for an average fixed rate of 2.423 percent per annum.

The
short-term bridge loan facility is for an aggregate principal amount of U.S. $500 million and is guaranteed by us and our subsidiary Luxottica S.r.l. The
final maturity of the credit facility was eight months from the first utilization date. On April 29, 2008, we and our subsidiary U.S. Holdings entered into an amendment and transfer agreement
to this facility. The terms of such amendment and transfer agreement, among other things, reduced the total facility amount from U.S. $500 million to U.S. $150 million, effective
July 1, 2008, and provided for a final maturity date that was eighteen (18) months from the effective date of the agreement. On November 27, 2009, we and U.S. Holdings amended
this facility to, among other things, reduce the total facility amount from U.S. $150 million to U.S. $75 million effective November 30, 2009 and provide for a final maturity date
of November 30, 2011. The new terms also provide for the repayment of U.S. $25 million on November 30, 2010 and the remaining principal at the final maturity date. From
November 30, 2009, interest accrued at LIBOR (as defined in the facility agreement) plus 1.90 percent. U.S. Holdings prepaid U.S. $25 million on September 8, 2010 and the
remaining U.S. $50 million on October 12, 2010. As of December 31, 2010, this credit facility had been repaid in full.



In April 2008, we entered into a new Euro 150.0 million unsecured credit facility with Banca Nazionale del Lavoro. This
facility was an 18-month revolving credit facility that provided borrowing availability of up to Euro 150.0 million. The amounts borrowed under the revolving facility could
be borrowed and repaid until final maturity. Interest accrued at EURIBOR (as defined in the agreement) plus 0.375 percent. We could select interest periods of one, three or six months. In June
2009, we renegotiated this credit facility. The new facility consists of a two-year unsecured credit facility that is a revolving loan providing borrowing availability of up to
Euro 150.0 million. Interest accrues on this facility at EURIBOR plus 1.90 percent. We can select interest periods of one, three or six months. The final maturity of the credit
facility is July 13, 2011. As of December 31, 2010, no amounts were drawn under this facility.



On May 29, 2008, we entered into a Euro 250 million revolving credit facility agreement, guaranteed by our
subsidiary, U.S. Holdings, with Intesa Sanpaolo S.p.A. as agent and Intesa Sanpaolo S.p.A., Banca Popolare di Vicenza S.c.p.A. and Banca Antonveneta S.p.A. as lenders. The final
maturity of the credit facility is May 29, 2013. The credit facility requires repayment of equal quarterly installments of principal of Euro 30 million starting August 29,
2011 and a last repayment of Euro 40 million on the final maturity date. Interest accrues at EURIBOR (as defined in the agreement) plus a margin between 0.40 percent and
0.60 percent based on the "Net Debt/EBITDA" ratio, as defined in the agreement (1.531 percent as of December 31, 2010). As of December 31, 2010,
Euro 250.0 million was borrowed under this credit facility.

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In
June and July 2009, we entered into eight interest rate swap transactions with an aggregate initial notional amount of Euro 250 million with various banks ("Intesa
Swaps"). The Intesa Swaps will decrease their notional amount on a quarterly basis, following the amortization schedule of the underlying facility, starting on August 29, 2011. The Intesa Swaps
will expire on May 29, 2013. The Intesa Swaps were entered into as a cash flow hedge on the Intesa Sanpaolo S.p.A. credit facility discussed above. The Intesa Swaps exchange the floating
rate of EURIBOR (as defined in the agreement) for an average fixed rate of 2.25 percent per annum.



On November 11, 2009, we entered into a Euro 300 million Term Facility Agreement, guaranteed by our subsidiaries
U.S. Holdings and Luxottica S.r.l., with MediobancaBanca di Credito Finanziario S.p.A., as agent, and MediobancaBanca di Credito Finanziario S.p.A.,
Deutsche Bank S.p.A., Calyon S.A. Milan Branch and Unicredit Corporate Banking S.p.A., as lenders. The final maturity of the Term Facility was November 30, 2012. Interest
accrued at EURIBOR (as defined in the agreement) plus a margin between 1.75 percent and 3.00 percent based on the "Net Debt/EBITDA" ratio, as defined in the agreement. In November 2010,
we renegotiated this facility, extending the maturity for a further two years. The new expiration date is November 30, 2014. Interest currently accrues at EURIBOR plus a margin between
1.00 percent and 2.75 percent, as defined in the amendment (2.308 percent as of December 31, 2010). As of December 31, 2010, Euro 300.0 million was
borrowed under this credit facility.

Our Other Debt Financings



On September 3, 2003, our subsidiary U.S. Holdings closed a private placement of U.S. $300 million of senior unsecured
guaranteed notes, issued in three series (Series A, Series B and Series C). The Series A and Series B Notes matured on September 3, 2008 and have been repaid
in full. Interest on the Series C Notes accrued at 4.45 percent per annum and they matured on September 3, 2010. The Series C Notes required annual prepayments beginning on
September 3, 2006 through the applicable dates of maturity. The Notes were guaranteed on a senior unsecured basis by us and Luxottica S.r.l., our wholly-owned subsidiary. On
September 3, 2010, the outstanding Series C Notes were repaid in full.



On July 1, 2008, U.S. Holdings closed a private placement of U.S. $275 million of senior unsecured guaranteed notes,
issued in three series (Series A, Series B and Series C). The aggregate principal amounts of the Series A, Series B and Series C Notes are U.S.
$20 million, U.S. $127 million and U.S. $128 million, respectively. The Series A Notes mature on July 1, 2013, the Series B Notes mature on July 1,
2015 and the Series C Notes mature on July 1, 2018. Interest on the Series A Notes accrues at 5.96 percent per annum, interest on the Series B Notes accrues at
6.42 percent per annum and interest on the Series C Notes accrues at 6.77 percent per annum. The proceeds from the Notes were used to repay a portion of the bridge loan facility
that expired on July 1, 2008.



On January 29, 2010, U.S. Holdings closed a private placement of U.S. $175 million of senior unsecured guaranteed notes,
issued in three series (Series D, Series E and Series F). The aggregate principal amount of each of the Series D and Series E Notes is U.S. $50 million and
the aggregate principal amount of the Series F Notes is U.S. $75 million. The Series D Notes mature on January 29, 2017, the Series E Notes mature on
January 29, 2020 and the Series F Notes mature on January 29, 2019. Interest on the Series D Notes accrues at 5.19 percent per annum, interest on the Series E
Notes

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accrues
at 5.75 percent per annum and interest on the Series F Notes accrues at 5.39 percent per annum. The proceeds from the Notes were used for general corporate purposes.



On September 30, 2010, we closed a private placement of Euro 100 million senior unsecured guaranteed notes, issued
in two series (Series G and Series H). The aggregate principal amounts of the Series G and Series H Notes are Euro 50 million and
Euro 50 million, respectively. The Series G Notes mature on September 15, 2017 and the Series H Notes mature on September 15, 2020. Interest on the
Series G Notes accrues at 3.75 percent per
annum and interest on the Series H Notes accrues at 4.25 percent per annum. The Notes contain certain financial and operating covenants. We were in compliance with those covenants as of
December 31, 2010. The proceeds from the Notes, received on September 30, 2010, were used for general corporate purposes.



On November 10, 2010, we closed an offering in Europe to institutional investors of Euro 500 million of senior
unsecured guaranteed notes due November 10, 2015. The notes are listed on the Luxembourg Stock Exchange under ISIN XS0557635777. Interest on the Notes accrues at 4.00 percent per annum.
The Notes are guaranteed on a senior unsecured basis by U.S. Holdings and Luxottica S.r.l., both our wholly-owned subsidiaries. The Notes can be prepaid at our option under certain
circumstances. The proceeds from the Notes are being used for general corporate purposes.

Outstanding Standby Letters of Credit

Certain U.S. subsidiaries have obtained various standby and trade letters of credit from banks that aggregated
Euro 34.0 million and Euro 29.9 million as of December 31, 2010 and 2009, respectively. Most of these letters of credit are used for security in risk management
contracts, purchases from foreign vendors or as security on store leases. Most standby letters of credit contain evergreen clauses under which the letter is automatically renewed unless the bank is
notified not to renew. Trade letters of credit are for purchases from foreign vendors and are generally outstanding for a period that is less than six months. Substantially all the fees associated
with maintaining the letters of credit fall within the range of 40 to 60 basis points annually.

Concentration of Credit Risk

Financial instruments which potentially expose us to concentration of credit risk consist primarily of cash, investments and accounts
receivable. We attempt to limit our credit risk associated with cash equivalents by placing our cash balances and investments with highly-rated banks and financial institutions. However, at any time,
amounts invested at these banks may be in excess of the amount of insurance provided on such deposits. With respect to accounts receivable, we limit our credit risk by performing ongoing credit
evaluations, and certain customers may be required to post security in the form of letters of credit. As of December 31, 2010 and 2009, no single customer's balance comprised 10 percent
or more of the overall accounts receivable
balance. However, included in accounts receivable as of December 31, 2010 and 2009, was approximately Euro 22.6 million and Euro 13.0 million, respectively, due from
the host stores of our Licensed Brands retail division. These receivables represent cash proceeds from sales deposited into the host stores' bank accounts, which are subsequently forwarded to us on a
weekly or monthly basis depending on our contract with the particular host store and are based on short-term contract arrangements.

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Our Working Capital

Set forth below is certain information regarding our working capital (total current assets minus total current liabilities):

As of December 31,2010

2009

2008(In millions of Euro)Current Assets


2,152.5


1,722.0


1,805.9Current Liabilities


(1,503.3
)

(1,315.2
)

(1,626.6
)Working Capital


649.2


406.8


179.3


In 2008, working capital increased due to a decrease in the current portion of long-term debt scheduled to mature in 2009. That
decrease was caused by the refinancing of maturing debt and by the repayment of maturing debt using cash provided by operations for the year. The increases in 2010 and 2009 are primarily attributable
to stronger performance by the Group on certain components of working capital beginning in 2009 and continuing in 2010.

We
believe that the financial resources available to us will be sufficient to meet our currently anticipated working capital and capital expenditure requirements for the next
12 months.

We
do not believe that the relatively moderate rates of inflation which have been experienced in the geographic markets where we compete have had a significant effect on our net sales or
profitability. In the past, we have been able to offset cost increases by increasing prices, although we can give no assurance that we will be able to do so in the future.

Off-Balance Sheet Arrangements

We have no material off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

We
use, from time to time, derivative financial instruments, principally interest rate and currency swap agreements, as part of our risk management policy to reduce our exposure to
market risks from changes in foreign exchange rates and interest rates (see Note 30 to our Consolidated Financial Statements included in Item 18 of this annual report). Although we have
not done so in the past, we may enter into other derivative financial instruments when we assess that the risk can be hedged effectively.

Contractual Obligations and Commercial Commitments

We are party to numerous contractual arrangements consisting of, among other things, royalty agreements with designers, leases for retail store, plant, warehouse
and office facilities, as well as certain data processing and automotive equipment, and outstanding borrowings under credit agreements and facilities with financial institutions to finance our
operations. These contractual arrangements may contain minimum annual commitments. A more complete discussion of the obligations and commitments is included in Notes 19 and 26 to our
Consolidated Financial Statements included in Item 18 of this annual report.

The
following table summarizes the scheduled maturities of our long-term debt, minimum lease commitments under non-cancelable operating leases, minimum payments
under non-cancelable royalty arrangements, purchase commitments (including long-term) and endorsement contracts as of December 31, 2010. The table does not include
pension liabilities or liabilities for uncertain tax payments. We cannot make a reasonable and reliable estimate of when or if the uncertain tax payments

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will
be made. Our pension plans are discussed in Note 22 to our Consolidated Financial Statements included in Item 18 of this annual report.

Payments Due by Period(in millions of Euro)
Contractual Obligations

1 Year

1 to 3
Years

3 to 5
Years

After 5
Years

TotalLong-Term Debt and Current Maturities(1)(2)


197.6


1,212.7


895.3


326.8


2,632.4Interest Payments(3)


70.2


110.9


64.4


48.2


293.7Operating Leases


270.2


437.0


308.9


268.9


1,285.0Minimum Royalty Arrangements(4)


69.9


121.1


79.4


122.0


392.4Long-Term Purchase Commitments(5)


1.6











1.6Endorsement Contracts(6)


7.3


1.9








9.2Other Commitments(7)


14.7


6.7


0.6





22.0Total


631.5


1,890.3


1,348.6


765.9


4,636.3


(1)As
described previously, our long-term debt has certain financial and operating covenants that may cause the acceleration of future maturities
if we do not comply with them. We were in compliance with these covenants as of December 31, 2010 and expect to be in compliance for the foreseeable future.(2)The
calculation of Long-Term Debt and Current Maturities includes capital lease obligations, pursuant to which the following amounts are
scheduled to become due and payable: Euro 1.1 million (less than 1 year) and Euro 1.8 million (1 to 3 years).(3)These
amounts do not include interest payments due under our various revolving credit facilities as the amounts to be borrowed in future years are uncertain
at this time. In addition, interest rates used to calculate the future interest due on our variable interest rate term loans were calculated based on the interest rate as of December 31, 2010
and assume that we make all scheduled principal payments as they mature.(4)These
amounts represent obligations under our license agreements with designers, some of which require us to make annual guaranteed minimum payments.(5)These
amounts represent obligations under our supplier commitments with various suppliers.(6)These
amounts represent obligations under our endorsement contracts with selected athletes and others who endorse Oakley products, certain of which require
us to pay specified annual minimum commitments and sometimes additional amounts based on performance goals.(7)Other
commitments mainly include auto, machinery and equipment lease commitments as well as commitments to open additional Sunglass Hut points of sale in
approximately 430 Macy's department stores in the United States.


At
December 31, 2010, we had available funds of approximately Euro 559.8 million under our unused short-term lines of credit. Substantially all of these
lines have terms of less than one year, but they have been renewed annually in prior years. For additional information, see Note 26 to our Consolidated Financial Statements included in
Item 18 of this annual report.

ITEM 6.    DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Directors and Senior Management

The Board of Directors of Luxottica Group S.p.A. currently consists of 15 members, each of whom was appointed at the stockholders' meeting held on
April 29, 2009.

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The
current term of the Board of Directors expires at the time of the approval of the statutory financial statements as of and for the year ending December 31, 2011.

Set
forth below is certain information regarding the directors and senior management of Luxottica Group S.p.A.:

Name

Age

Senior
Manager or
Director(1)
Since

PositionLeonardo Del Vecchio


75

1961

Chairman of the Board of DirectorsLuigi Francavilla


73

1968/1985

Deputy ChairmanAndrea Guerra


45

2004

Chief Executive Officer and DirectorRoger Abravanel


64

2006

DirectorMario Cattaneo


80

2003

DirectorEnrico Cavatorta


49

1999/2003

Chief Financial Officer, General ManagerCorporate Functions and DirectorRoberto Chemello


56

1979/1985

DirectorClaudio Costamagna


55

2006

DirectorClaudio Del Vecchio


54

1978/1986

DirectorSergio Erede


70

2004

DirectorSabina Grossi


45

2003

DirectorIvanhoe Lo Bello(2)


48

2009

DirectorMarco Mangiagalli


62

2009

DirectorGianni Mion


67

2004

DirectorMarco Reboa


55

2009

DirectorPaolo Alberti


48

2009

Executive V.P., WholesaleColin Baden


49

1999

President and CEO OakleyChris Beer


45

2003

Chief Operating Officer, Luxottica Optical Retail Australasia and Greater ChinaMichael A. Boxer


49

1993

Senior V.P. and General Counsel N.A.Kerry Bradley


54

1988

Chairman, Vision DevelopmentTom Coleman


63

1987

President, General Manager, LensCrafters*Alessandro Curotti


51

2007

Group General Counsel and Company SecretaryFabio D'Angelantonio


41

2005

Chief Marketing Officer and Group Retail Luxury and Sun DirectorIvan Dompé


38

2008

Group Corporate Communications DirectorValerio Giacobbi


46

1991

Chief Risk Management and Compliance OfficerSeth McLaughlin


49

1994

Executive V.P., Pearle Vision, Licensed Brands and Canada OpticalAntonio Miyakawa


44

1993

Executive Vice President, Marketing, Style & ProductMario Pacifico


48

2003

Group Shared Services and Corporate Reporting DirectorNicola Pelà


48

2005

Group Human Resources DirectorCarlo Privitera


41

2005

COO Retail Business Services and Distribution North AmericaAlessandra Senici


43

2000

Group Investor Relations DirectorGianluca Tagliabue


42

2010

Group Business Development DirectorMassimo Vian


38

2005

Group Chief Operations OfficerMark Weikel


56

2010

President and General Manager, LensCrafters*


*Mr. Coleman
held the position until December 31, 2010. Mr. Weikel has held the position since January 2011. In 2010, Mr. Weikel
was Senior V.P. and General Manager, Sunglass Hut.(1)For
our senior managers, the periods listed in the table reflect periods of affiliation with Luxottica Group S.p.A. or any of its predecessors and
affiliates, and not necessarily the period since they were appointed to their current position. When two years are indicated, the former is the first year of affiliation with Luxottica
Group S.p.A. or any of its predecessors and affiliates and the latter is the year of appointment as a director.(2)Mr. Lo
Bello was nominated by minority stockholders.


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Executive
officers serve at the discretion of the Board of Directors. Messrs. Cattaneo, Chemello, Mion, Abravanel, Costamagna, Claudio Del Vecchio, Erede,
Mangiagalli, Reboa, Lo Bello and Ms. Grossi are all non-executive directors. In addition, Messrs. Cattaneo, Mion, Abravanel, Costamagna, Mangiagalli, Reboa and Lo Bello are
also independent directors under Italian law.

Pursuant
to Italian law and our By-laws, a list for the appointment of the Board of Directors can be presented only by stockholders who hold the minimum percentage of the
share capital established annually by Consob. For 2009, this was equal to 1 percent of the share capital of the Company. All directors except Mr. Lo Bello were appointed by Delfin
S.à r.l., our controlling stockholder. Mr. Lo Bello was appointed by minority stockholders.

Pursuant
to Italian law, we maintain a Board of Statutory Auditors, elected at the stockholders' meeting, composed of three experts in accounting matters who are required to have no
other affiliation with Luxottica Group S.p.A. and who must satisfy certain professional and other standards. The Board of Statutory Auditors is required to verify that we: (i) comply
with applicable law and our bylaws; (ii) respect the principles of correct administration; (iii) maintain adequate organizational structure, internal controls and administrative and
accounting systems; (iv) ensure that our
accounting system represents the facts in a fair and true manner; (v) comply with the Italian Code of Corporate Governance; and (vi) give adequate instructions to our subsidiaries. It
also supervises our financial reporting process, the effectiveness of our internal auditing system and risk assessment and the independence of our auditing firm. Although members of the Board of
Statutory Auditors are required to attend the meetings of the Board of Directors and of the stockholders, they are not deemed to be members of the Board of Directors and do not vote on matters
submitted to such meetings. Effective as of April 29, 2009, the members of the Board of Statutory Auditors are Francesco Vella, Chairman, Enrico Cervellera and Alberto Giussani. As of
April 29, 2009, there were also two alternate members of the Board of Statutory Auditors, Mario Magenes and Alfredo Macchiati. On May 29, 2009, Mr. Magenes died. Giorgio Silva was
appointed to succeed Mr. Magenes at the stockholders' meeting held on October 29, 2009. The alternate members will replace current members who leave their position during the current
term. Francesco Vella and Alfredo Macchiati were selected from a list submitted by the minority stockholders referred to above. Enrico Cervellera, Alberto Giussani and Mario Magenes were selected from
a list submitted by Delfin S.à r.l. Giorgio Silva was appointed by the majority of our stockholders. The current term of the Board of Statutory Auditors expires at the time of
the approval of the statutory financial statements as of and for the year ending December 31, 2011.

See
Item 16G"Corporate GovernanceSummary of the Significant Differences Between Our Corporate Governance Practices and the Corporate Governance Standards
of the New York Stock Exchange" for more information regarding the designation of the Board of Statutory Auditors to act as our audit committee.

Pursuant
to the Italian Code of Corporate Governance, issued by Borsa Italiana, we also maintain a Human Resources Committee, elected within the members of the Board of Directors. The
Human Resources Committee has verification, advisory and proposal-making functions, including: (i) recommending to the Board of Directors the remuneration payable to the Company's Directors
with additional responsibilities, determining the remuneration criteria for senior management of the Company and of the entire Group and making proposals to the Board of Directors regarding the
remuneration of senior management based on such criteria; and (ii) reviewing the Luxottica Group employees' incentive plans and making proposals to the Board of Directors regarding the
beneficiaries of the plans. Effective as of April 29, 2009, the members of the Human Resources Committee are non-executive directors Gianni Mion, Roger Abravanel, Claudio
Costamagna, who acts as Chairman, and Sabina Grossi, three of whom are independent. The term of the Human Resources Committee is co-extensive with the term of our Board of Directors since
its members are also members of our Board of Directors.

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We
also maintain an Internal Control Committee elected from the members of the Board of Directors. The Internal Control Committee is responsible for performing investigations, providing
advice and submitting proposals to the Board of Directors. In particular, it performs the following activities: (i) assists the Board of Directors in the execution of its internal controls
tasks and
mandates; (ii) evaluates the planned initiatives and projects of the Internal Control Officer ("ICO"); (iii) reviews and assesses the regular reports issued by the ICO;
(iv) assesses, together with the manager responsible for the preparation of the Company's accounting records and the managers and the auditors, the proper use and application of accounting
principles; (v) assesses the results of the activities performed by the Internal Auditing function; (vi) monitors the effectiveness of the auditing process; and (vii) expresses
opinions concerning the identification of corporate risks as well as the planning, implementation and management of the internal control system.

See
Item 16G"Corporate GovernanceSummary of the Significant Differences Between Our Corporate Governance Practices and the Corporate Governance Standards
of the New York Stock Exchange" for more information regarding the designation of the Human Resources Committee to act as our compensation committee.

A
short biography of each of our Directors and executive officers is set forth below:

Leonardo Del Vecchiois the founder of our operations and has been Chairman of the Board since the Group was formed in 1961. In 1986, the
President of the Republic of Italy conferred on Mr. Del Vecchio the honor of Cavaliere dell'Ordine al "Merito del Lavoro" (Knight of the Order for Labor Merit). In May 1995, he received an
honorary degree in Business Administration from the Venice Ca' Foscari University. In 1999, he received a Master "honoris causa" in International Business from MIB- Management School in
Trieste, and in 2002, he received an honorary degree in Managerial Engineering from the University of Udine. In March 2006, Mr. Del Vecchio received another honorary degree in Materials
Engineering from Politecnico of Milan. Mr. Del Vecchio is also a director of Beni Stabili S.p.A., GiVi Holding S.p.A., and Gianni Versace S.p.A., Vice Chairman of Fonciere
des Regions and a director of Delfin S.à r.l., Aterno S.a.r.l., Kairos Partners SGR S.p.A. and Luxottica UK.

Luigi Francavillajoined the Group in 1968, has been Director since 1985, Deputy Chairman since 1991, and was, until June 2010, the Chief
Quality Officer of the Group. From 1977 until May 2009, he was Group Product and Design Director. From 1972 to 1977, Mr. Francavilla was General Manager of Luxottica S.r.l. and, from
1969 to 1971, he served as Technical General Manager of Luxottica S.r.l. In addition, he is Chairman of Luxottica S.r.l., our principal operating subsidiary. Mr. Francavilla is
also a Director in the Venice branch of the Bank of Italy. In April 2000, he received an honorary degree in Business Administration from Constantinian University in Cranston, Rhode Island, U.S.A.

Andrea Guerrawas appointed a Director and Chief Executive Officer of the Company on July 27, 2004. Prior to joining the Company,
Mr. Guerra was with Merloni Elettrodomestici since 1994, where, from 2000, he was its Chief Executive Officer. Prior to being at Merloni, Mr. Guerra worked for Marriott Italia where he
became Director of Marketing. He received a degree in Business Administration from the "La Sapienza" University of Rome in 1989. Mr. Guerra is Director of Luxottica S.r.l., Chairman of
OPSM Group PTY Limited, member of the Board of Directors of Luxottica U.S. Holdings Corp., Luxottica Retail North America Inc. and of Oakley, Inc., all of which
belong to Luxottica Group, and of our affiliate company Multiopticas Internacional S.L. He is also member of the Board of Directors of Parmalat S.p.A., Amplifon S.p.A. and DEA
Capital S.p.A.

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Roger Abravanelhas been a director since 2006. He worked at McKinsey & Company
from 1972 until June 2006.
Mr. Abravanel is also involved in international consulting projects, advising on strategic, organizational and operational development issues. He graduated with a degree in Engineering from the
Politecnico di Milano and received a Masters in Business Administration from INSEAD in Fontainebleau (with High Distinctions). He is the author of several studies and articles on business
organization. He is a member of the Board of Directors of Teva Pharmaceutical Industries LTD, Banca Nazionale del Lavoro S.p.A., COFIDE S.p.A. and Coesia S.p.A.

Mario Cattaneohas been a Director since 2003. He is emeritus professor of Corporate Finance at the Catholic University of Milan. He was a
director of Eni S.p.A. from 1998 until 2005 and of Unicredito from 1999 until 2005 and Statutory Auditor of the Bank of Italy from 1991 until 1999. He is the Chairman of Euromobiliare Asset
Management SGR S.p.A. and is a member of the Board of Directors of Bracco S.p.A. and Banca Sella Holding S.p.A. Furthermore, Mr. Cattaneo is the chairman of the Board of
Statutory Auditors of Italiana Assicurazioni S.p.A. and Sara Assicurazioni S.p.A. He is an auditor of Michelin Italiana Sami S.p.A. and a member of the Supervisory Board of UBI
Banca S.C.p.A.

Enrico Cavatortahas been General ManagerCorporate Functions since March 2011. He has been a Director of the Group since
2003. He has been Chief Financial Officer since he joined the Group in 1999 and is a director of the principal subsidiaries of the Company, including Luxottica U.S. Holdings Corp.,
Luxottica S.r.l., OPSM Group Pty Ltd., Luxottica Retail North America Inc. and Oakley, Inc., and of our affiliate company Multiopticas Internacional S.L. Prior to joining
Luxottica, Mr. Cavatorta was with Piaggio S.p.A., most recently as Group Controller, responsible for planning and control. From 1993 to 1996, Mr. Cavatorta was a consultant with
McKinsey & Co., having joined the firm from Procter & Gamble Italy, where he worked from 1985 to 1993, most recently as Controller. Mr. Cavatorta graduated with the highest
honors from the LUISS University in Rome with a bachelor's degree in Business Administration.

Roberto Chemellohas been a Director since 1985. He holds a degree in Corporate Finance from the Cà Foscari University in
Venice. He joined the Group in 1979. Until 1985 he was Chief Financial Officer of the Company. Between 1985 and 2004 he was Chief Executive Officer of Luxottica. He then took over the position of
Chief Operations Officer, which he held until July 2008, when he left all operational positions held in Luxottica. In 2007, he acquired control of Woodn S.r.l., a company that specializes in
the manufacturing and marketing of wood-based composites, where he holds the position of Chairman of the Board of Directors. In 2008, he was appointed Chairman of the Board of Directors of
the Chinese company, Sunbow Environmental Decoration Material Co Ltd, fully owned by Woodn S.r.l., which manufactures wooden composites for distribution both in China and
internationally. In 2008, he was appointed member of the Board of Directors of the Entrepreneurs' Association of the Belluno Province. He is a director of Stefanel S.p.A.

Claudio Costamagnahas been a Director since 2006. Mr. Costamagna holds a business administration degree and has held important
offices in Citigroup, Montedison and Goldman Sachs where he served for many years as Chairman of the Investment Banking division for Europe, the Middle East and Africa. He is currently Chairman of "CC
e Soci", a financial advisory boutique he founded. Mr. Costamagna is a member of the Board of Directors of AAA S.A., Autogrill S.p.A., Bvlgari S.p.A., DEA
Capital S.p.A., and Virgin Group Holding Limited BVI. He is also Chairman of Virtual B Sim S.p.A, and a member of the International Advisory Board of the Bocconi University.

Claudio Del Vecchio,a son of Leonardo Del Vecchio, joined the Group in 1978 and has been a Director since 1986. From 1979 to 1982, he
managed our Italian and German distribution operations. From 1982 until 1997, he was responsible for all business operations of the Group in North America. He also serves as a Director of U.S.
Holdings, a key subsidiary in North America. Claudio Del Vecchio is Chairman and Chief Executive Officer of Retail Brand Alliance, Inc., the owner of Brooks Brothers.

Sergio Eredehas been a Director since 2004. Mr. Erede graduated magna cum laude from the University of Milan in 1962 with a degree
in jurisprudence and obtained an LL.M. from Harvard Law

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School
in 1964. From 1965 to 1969, he was head of the legal department of IBM Italia S.p.A. Prior to such time, Mr. Erede was an attorney at the law firm of Sullivan & Cromwell
from 1964 to 1965, and the law firm of Hale & Dorr from 1963 to 1964. In 1999, he founded the law firm of Bonelli, Erede & Pappalardo (which is the successor by merger to the firm of
Erede e Associati), a leading firm in Italian financial transactions. Additionally, he is a member of the Board of Directors of Fonciere des Regions, Interpump Group S.p.A., Gruppo Editoriale
L'Espresso S.p.A., Società Italo Britannica L. ManettiH. Roberts S.p.A., Manuli Rubber Industries S.p.A., Gruppo IPG
Holding S.r.l. (Gruppo Interpump), Bolton Group International S.A. and Sintonia S.A. Additionally, Mr. Erede is Chairman of AON Italia S.p.A. and vice chairman of
the Board of Directors of Banca Nazionale del Lavoro S.p.A.

Sabina Grossihas been a Director since 2003. She joined Luxottica Group S.p.A. in 1996 and was Head of Investor Relations, a
position which she held from 1996 until 2004. Prior to joining Luxottica Group S.p.A., she was a financial analyst with Caboto Sim S.p.A. from 1994 until 1996. From 1991 to 1993,
Ms. Grossi was an associate professor in the school of engineering of the La Sapienza University in Rome, where she taught undergraduate courses as well as published papers on mathematics and
statistics. Ms. Grossi, who is a C.P.A. in Italy, graduated with the highest honors from the LUISS University in Rome with a bachelor's degree in Business Administration. Ms. Grossi is
currently a member of the Board of Directors of Molmed S.p.A. She is also the chairperson of the OneSight foundation in Italy.

Ivanhoe Lo Bellobecame a Director on April 29, 2009. He is Chairman of Unicredit Leasing S.p.A. He was Chairman of the
Board of Directors of Banco di Sicilia S.p.A.Gruppo Unicredit from April 2008 until October 2010. From January 2008 to April 2008, he was Vice President of Banco di
Sicilia S.p.A.Gruppo Unicredit. From 1998 to 2001 and again since January 2008, he has been a member of the Board of Directors of Banco di Sicilia S.p.A. From 2004 to 2008,
he was Director of the Syracuse branch of the Bank of Italy. He is President of Confindustria Sicilia and the Chamber of Commerce of Syracuse. Mr. Lo Bello graduated magna cum laude from the
University of Catania in 1989 with a degree in jurisprudence.

Marco Mangiagallibecame a Director on April 29, 2009. Mr. Mangiagalli received a degree in Political Economy from the
"Luigi Bocconi" University in 1973. Most of his career has been with Eni Group; he also has had working experience with Barclays Group in Italy and the Nuovo Banco Ambrosiano Group. He has served as a
member of the Board of Directors for Agip S.p.A., Polimeri Europa S.p.A., Nuovo Pignone S.p.A., Snamprogetti S.p.A., Saipem S.p.A., Eni International
Holding B.V., Albacom S.p.A., Emittenti Titoli S.p.A. and Oil Investment Corp. He also has been Chairman of Eni Coordination Center S.A., Eni Bank Ltd/Banque
Eni S.A. and of Enifin S.p.A. Since August 2008 he has been Chairman of the Board of Directors for Saipem S.p.A. He is also a member of the Supervisory Board of Intesa San
Paolo S.p.A.

Gianni Mionhas been a Director since 2004. He is Chief Executive Officer of Edizione S.r.l., a position he has held since 1986.
Prior to joining Edizione S.r.l., Mr. Mion was the Chief Financial Officer of Marzotto S.p.A. from 1985 to 1986, Managing Director of Fintermica S.p.A. from 1983 to 1985,
Vice President of Gepi S.p.A. from 1974 to 1982, controller of McQuay Europa S.p.A. from 1972 to 1974 and an auditor at the accounting firm of KPMG from 1967 to 1972. He has been chief
executive officer of Edizione Holding S.p.A. since 1986 and prior to that he was the chief executive officer of Sintonia S.p.A. Mr. Mion is Chief Executive Officer of
Edizione S.r.l. and also sits on the Board of Directors of Benetton Group S.p.A., Autogrill S.p.A., Atlantia S.p.A., Sintonia, S.A., Aeroporti di Roma S.p.A.
and Burgo Group S.p.A. Mr. Mion graduated from the Venice University Ca' Foscari with a degree in Business Administration and is a Certified Public Accountant.

Marco Reboabecame a Director on April 29, 2009. Mr. Reboa received a degree in Business Economics from Universita
Commerciale L. Bocconi in Milan, Italy in 1978. He has been registered in the Register of Chartered Accountants of Milan since 1982 and he is an auditor pursuant to Ministerial

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Decree
since 1995. He is currently a professor at the Faculty of Law at the Libero Istituto Universitario Carlo Cattaneo in Castellanza, Italy and works in private practice in Milan, specializing in
extraordinary financial transactions. Mr. Reboa has published books and articles on financial statements, economic appraisals and corporate governance. He is
editor-in-chief of the Magazine of Chartered Accountants. Mr. Reboa was the Chairman of the Luxottica Group S.p.A. Board of Statutory Auditors from
June 14, 2006 until April 29, 2009. He is a member of the Board of Directors of Eni S.p.A. and Interpump Group S.p.A., Chairman of the Board of Auditors of
Mediobanca S.p.A. and Auditor of Gruppo Lactalis Italia S.p.A., Egidio Galbani S.p.A. and Big S.r.l.

Paolo Albertijoined Luxottica Group in May 2009 as Executive Vice President, Wholesale. Prior to joining Luxottica, he was Executive VP
at Bvlgari Parfums where he was responsible for the development, marketing, logistics and commercialization of Bvlgari Perfumes and Cosmetics. He was also responsible for the Bvlgari eyewear license
with Luxottica. Prior to being at Bvlgari, he was General Manager at L'Oréal, Consumer Division, Director at Johnson & Johnson and Advertising Brand Manager at
Procter & Gamble. Mr. Alberti holds a B.S. in Civil Management Engineering from the University of the Pacific (California, USA) and a Master in Business Administration from Bocconi
University.

Colin Badenbecame Chief Executive Officer of Oakley in July 2009. He joined Oakley in February 1996 as Director of Design and served as
Vice President of Design from February 1997 to February 1999. In February 1999, Mr. Baden was named President. Prior to joining Oakley, Mr. Baden was a partner at Lewis Architects of
Seattle, Washington for six years and began advising Oakley on company image and design issues in 1993.

Chris Beerbecame Chief Operating Officer of Luxottica Optical Retail Australasia and Greater China in June 2009. Previously, he held the
position of Chief Operating Officer of Asia-Pacific and China retail operations of Luxottica Group, from 2003, having had 22 years of experience with the OPSM Group (later acquired
by Luxottica). He held senior executive positions in sales and operations before being appointed International HR Manager for the OPSM Group in 1999 and General Manager Retail for OPSM Australia in
2001. Mr. Beer oversees group operations, marketing, merchandise, distribution and manufacturing for the Australia/NZ Region.

Michael A. Boxerhas been the Senior Vice President, General CounselNorth America since September 2005. Mr. Boxer is
responsible for overseeing all legal matters for the Company's North American retail and wholesale operations. Mr. Boxer has held various other executive roles since joining the Company in
1993. Prior to joining Luxottica in 1993, Mr. Boxer served as a corporate attorney with the law firm of Winston & Strawn in New York. He received his undergraduate degree from Columbia
University and his law degree from the New York University School of Law.

Kerry Bradleyhas been Chairman, Vision Development since January 2011. Mr. Bradley was President of Luxottica Retail North America
from February 2009 until January 2011, and prior to that he served as Chief Operating Officer of Retail North America since 2002. From 1998 to 2002, he held the position of Executive Vice President of
LensCrafters. Mr. Bradley is responsible for all LensCrafters, Cole and EyeMed sales, marketing and operations. Mr. Bradley has held various other senior executive roles since joining
LensCrafters in 1988. Mr. Bradley has a Master's degree in Business from the University of Edinburgh, Scotland and a B.S. degree in Business from Auburn University in Alabama.

Tom Colemanhas been President and General Manager, LensCrafters from January 2010 to December 2010. During 2008 and 2009,
Mr. Coleman served as the Executive Vice President, Licensed Brands & Retail Development. From 2003 to 2008, he was Executive Vice President Retail Asia-Pacific, responsible
for all activities of the Group in the Asia-Pacific region, which includes Australia, New Zealand, Hong Kong, Singapore and Malaysia. Prior to this, he served as Executive Vice President
of LensCrafters since 1997. Mr. Coleman has held various other senior executive roles since joining LensCrafters in 1987.

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Alessandro Curottijoined Luxottica as Group General Counsel and Company Secretary in 2007. Previously, he served as General Counsel for
Telecom Italia Mobile, Finsiel (the IT affiliate of Telecom Italia) and Compart (Montedison Group), prior to which he practiced for six years as a corporate attorney with the law firm of
Abbatescianni & Partners in Milan. Mr. Curotti received his law degree from the University of Siena and was admitted to the Milan Bar in 1993.

Fabio D'Angelantoniowas appointed to lead the Retail Luxury and Sun Business at the beginning of 2009, while maintaining the role of
Chief Marketing Officer that he has held since 2005. After experience with the European Union and in the Olivetti Marketing Department in Brussels and Madrid, Mr. D'Angelantonio led the
international department from 1995 to 2000 for the Belgian publishing house Editions Hemma (part of the Havas-Vivendi group). At the beginning of 2000, Mr. D'Angelantonio joined Ciaoweb
(Fiat-Ifil group) where he held the position of Channel Manager, eventually moving to Merloni Elettrodomestici, today Indesit Company, where he held increasingly senior positions ending in
Brand & Advertising Manager, responsible for the management of the entire brand portfolio for the group. After receiving a degree in Business Administration in 1994 from the LUISS University in
Rome, he completed an MBA in International Management at the UBI in Brussels in 1999.

Ivan Dompéjoined Luxottica Group in 2008 as Group Corporate Communications Director. From 2005 to 2008, he was Media
Relations and Internet Communications Director at Edison, an Italian utility company. From 2000 to 2005, he served various roles in the Pirelli Group (in its business: tires, cables and real estate
divisions), leaving the company as Head of the media relations department. Previously, he spent over three years in PR consultancy firms Ketchum and Burson Marsteller and began his career as a
journalist in 1995. Mr. Dompé received a degree in Economics from Bocconi University in Milan.

Valerio Giacobbibecame Chief Risk Management and Compliance Officer in May 2010. From February 2009 to April 2010, he was Group Business
Development EVP. Previously, he was Executive Vice President North America from 2001 until March 2009. Prior to 2001, he was General Affairs Manager of Luxottica Group S.p.A. since 1991.
Mr. Giacobbi holds a bachelor's degree in Business Administration from the Ca' Foscari University in Venice.

Seth McLaughinhas been Executive V.P., Pearle Vision, Licensed Brands and Canada Optical since January 2011. Mr. McLaughin was
Senior Vice President and General Manager Pearle Vision, Luxottica Retail North America from March 2008 to January 2011. From October 2004 to March 2008, he served as Senior Vice President, Consumer
Marketing of Luxottica Retail North America. From July 1998 to October 2004, he served as Vice President, Consumer Marketing. Prior to joining the Luxottica Group he worked at Boston Consulting Group,
from 1990 to 1994, and in strategic consulting for Procter & Gamble, from 1984 to 1990. Mr. McLaughin has a Bachelor of Science degree from Iowa State University.

Antonio Miyakawais currently the Executive Vice President of Marketing, Style & Product for Luxottica Group S.p.A. From
2003 until May 2009, he was Executive Vice President of Wholesale and Marketing for Luxottica Group S.p.A. Previously, he was also head of our Asian wholesale operations, a position he held
since 1999. Prior to this he served as Executive Vice President of Luxottica's Japanese operations. Prior to joining Luxottica Group S.p.A., Mr. Miyakawa was a junior consultant for
Compact S.r.l. (an Italian consulting firm) working on various Luxottica matters.

Mario Pacificobecame Group Shared Services Director in May 2009 and, starting from December 2010, he also serves as Corporate Reporting
Director. He joined the Group as Head of Internal Auditing in 2003. Prior to joining Luxottica, he was VP of Internal Auditing of Prada Group. From 1990 to 2000, Mr. Pacifico was Controller of
Eni's Italy Division, Chief Financial Officer of Agip Trading B.V. and Audit Manager for Agip S.p.A. Mr. Pacifico graduated from Bocconi University in Milan with a degree in
Business Administration.

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Nicola Pelàhas been Group Human Resources Director since 2005. Before joining Luxottica, he held a number of HR positions
in Olivetti, Fiat, Barilla and SmithKline Beecham. He has lived and worked in Italy, the United States and Belgium. Mr. Pelà has a bachelor's degree in Law with honors and a
master's degree in Business Administration from CUOA (Centro Universitario di Organizzazione Aziendale).

Carlo Priviterabecame COO Retail Business Services and Distribution North America in November 2010. He joined Luxottica in 2005 as Group
Industrial Supply Chain Director. From January 2008 to November 2010, he was the Chief Information Technology Officer. From December 2001 to February 2005, Mr. Privitera served in various
capacities, including Planning Manager and Production Control & Logistic Director of Fiat Group and its subsidiaries. From 1996 to 2001, he served as Senior Manager in Efeso Consulenze.
Mr. Privitera has a bachelor degree in Engineering from the Politecnico in Milan. He also holds a master's degree from Osaka University.

Alessandra Senicihas served as the Group Investor Relations Director at Luxottica Group since May 2007. Ms. Senici joined the
Group in February 2000. She was previously an Equity Analyst with Rasfin Sim and Cariplo S.p.a., where she also worked on primary and secondary offerings together with the corporate finance and equity
capital markets teams. She has also worked in currency trading. Ms. Senici holds a Bachelor's Degree in Business Administration from the University of Brescia and is a member of A.I.R., the
Italian Association of Investor Relations Officers.

Gianluca Tagliabuejoined Luxottica in June 2010 and was appointed Group Business Development Director in November 2010. Prior to joining
the Company, Mr. Tagliabue worked at Value Partners Italy from June 2001 to October 2005, then moved to Value Partners' Brazilian offices for a 3-year assignment during which he
became a partner of the firm. Mr. Tagliabue started his professional career in corporate finance working in M&A and financial restructuring projects, and then spent 12 years in
management consulting companies, including Gemini Consulting. Mr. Tagliabue holds a degree in Business Administration from Bocconi University in Milan.

Massimo Vianbecame Chief Operations Director in July 2010. From January 2007 until 2010, he was Asia Operations Director. Prior to 2007,
he was responsible for the Group's manufacturing and engineering. Prior to joining Luxottica, he held various assignments at Momo S.r.l. Mr. Vian holds a degree in Management Engineering
from the University of Padova.

Mark Weikelbecame President and General Manager, Lenscrafters in January 2011. Mr. Weikel joined Luxottica in February 2010 as
Senior Vice President and General Manager of Sunglass Hut North America. Prior to joining Luxottica, he held a variety of leadership roles at Victoria's Secret, culminating in his appointment as
Chairman. Before that, he was also Chief Financial Officer for Foley's Department Stores and Chief Operating Officer for Lord & Taylor. Mr. Weikel is a graduate of the University of
Michigan Executive Program and received his Bachelor of Science in Accounting from Indiana State University.

Compensation

Set forth below is information regarding total compensation paid to the members of our Board of Directors and our Board of Statutory Auditors for services
rendered to Luxottica Group S.p.A. and our subsidiaries during 2010 (amounts in Euro).

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Name

Office held

Term of the office

Expiration

Compensation
for the office

Non cash
benefits

Bonuses and
other
incentives(*)

Other
compensation

Total amount
paid in 2010

2010 Bonuses
to be paid
in 2011(**)Leonardo Del Vecchio

Chairman

1.1.10 -
12.31.10

Approval of financial
statements as of
12.31.2011


831,198
(1)







408,001
(8)

1,239,199


Luigi Francavilla

Deputy Chairman

1.1.10 -
12.31.10

Approval of financial
statements as of
12.31.2011


139,200
(2)




698,200


998,545
(8)(9)(10)

1,835,945


355,610Andrea Guerra

CEO

1.1.10 -
12.31.10

Approval of financial
statements as of
12.31.2011


900,000
(3)

107,707


1,201,800


1,605,862
(9)

3,815,369


1,528,000Roger Abravanel

Director

1.1.10 -
12.31.10

Approval of financial
statements as of
12.31.2011


91,198
(4)










91,198


Mario Cattaneo

Director

1.1.10 -
12.31.10

Approval of financial
statements as of
12.31.2011


106,198
(5)










106,198


Enrico Cavatorta

Director

1.1.10 -
12.31.10

Approval of financial
statements as of
12.31.2011


81,198


5,609


370,650


698,357
(9)

1,155,814


470,650Roberto Chemello

Director

1.1.10 -
12.31.10

Approval of financial
statements as of
12.31.2011


81,198











81,198


Claudio Costamagna

Director

1.1.10 -
12.31.10

Approval of financial
statements as of
12.31.2011


96,198
(6)










96,198


Claudio Del Vecchio

Director

1.1.10 -
12.31.10

Approval of financial
statements as of
12.31.2011


81,198











81,198


Sergio Erede

Director

1.1.10 -
12.31.10

Approval of financial
statements as of
12.31.2011


81,198











81,198


Sabina Grossi

Director

1.1.10 -
12.31.10

Approval of financial
statements as of
12.31.2011


91,198
(4)

385








91,583


Ivanhoe Lo Bello

Director

1.1.10 -
12.31.10

Approval of financial
statements as of
12.31.2011


101,198
(7)










101,198


Marco Mangiagalli

Director

1.1.10 -
12.31.10

Approval of financial
statements as of
12.31.2011


101,198
(7)










101,198


Gianni Mion

Director

1.1.10 -
12.31.10

Approval of financial
statements as of
12.31.2011


91,198
(4)










91,198


Marco Reboa

Director

1.1.10 -
12.31.10

Approval of financial
statements as of
12.31.2011


101,198
(7)










101,198


Francesco Vella

Chairman of the Board of
Statutory Auditors

1.1.10 -
12.31.10

Approval of financial
statements as of
12.31.2011


105,000











105,000


Enrico Cervellera

Auditor

1.1.10 -
12.31.10

Approval of financial
statements as of
12.31.2011


70.000











70,000


Alberto Giussani

Auditor

1.1.10 -
12.31.10

Approval of financial
statements as of
12.31.2011


70.000











70,000


Compensation key managers(11)











218,590


4,367,899


6,713,670


11,300,159


4,391,518


(*)Compensation
for 2009 performance targets paid in 2010.(**)Compensation
for 2010 performance target to be paid in 2011.(1)Compensation
paid as Director and Chairman. The compensation paid as Chairman is equal to Euro 750,000.(2)Compensation
paid as Director and Deputy Chairman. The compensation paid as Deputy Chairman is equal to Euro 58,002.(3)Compensation
paid as Director and CEO.(4)Compensation
paid as Director and member of the Human Resources Committee. The compensation for the office in the Human Resources Committee is equal to
Euro 10,000.(5)Compensation
paid as Director and Chairman of the Internal Control Committee. The compensation for the office in the Internal Control Committee is equal to
Euro 25,000.(6)Compensation
paid as Director and Chairman of the Human Resources Committee. The compensation for the office in the Human Resources Committee is equal to
Euro 15,000.(7)Compensation
paid as Director and member of the Internal Control Committee. The compensation for the office in the Internal Control Committee is equal to
Euro 20,000.(8)Includes
compensation paid for services rendered to subsidiary companies. The Chairman is paid for his office in the subsidiary Luxottica U.K.; the Vice
Chairman is paid Euro 657,060 for his office in the subsidiary Luxottica S.r.l.(9)Includes
compensation as employee.(10)Includes
the amount paid for the termination of his employment due to his retirement in June 2010. Regarding the Deputy Chairman the remuneration as
employee and the variable portion linked to the 2010 performance target to be paid in 2011 are calculatedpro rata temporis.(11)Aggregate
compensation of 19 key managers, of whom 11 are employed in Luxottica Group S.p.A. and 8 are employed in its subsidiaries. Regarding those
employed in Luxottica Group S.p.A., "Other compensation" paid in 2010 is equal to Euro 3,774,603, "Non cash benefits" are equal to Euro 148,367, "Bonuses and other incentives" are
equal to Euro 1,669,200 and, "2010 Bonuses to be paid in 2011" are equal to Euro 2,166,750.


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Aggregate compensation paid by us to our senior management (who are not directors) as a group (19 people) was approximately Euro 13.4 million in
2010, of which approximately Euro 2.1 million represented provision for termination indemnities and social security charges required by Italian law. Members of this group were also
granted options to purchase an aggregate of 70,000 of our ordinary shares at a weighted average exercise price of Euro 20.72 per share in 2010. These options will expire on different dates from
April 30, 2019 to June 12, 2019. The aggregate amount set aside or accrued during the year ended December 31, 2010 to provide pension and retirement benefits for our directors who
are also members of our management was Euro 1.9 million. Our directors who are not members of management do not receive such benefits.

With
the exception of termination benefits provided for Mr. Guerra, our Chief Executive Officer, and Mr. Chemello, as described below, none of our directors have service
contracts with the Company or any of its subsidiaries providing for benefits upon termination of employment.

In
case of termination other than for good cause, we will pay our Chief Executive Officer a separation allowance, in addition to providing for termination indemnities provided by Italian
law, in the amount of two times the sum of:



This
separation allowance is also due in the case of termination for cause or in the case our Chief Executive Officer terminates the employment relationship within the 60 days
following one of the events listed below that leads to a reduction in responsibilities and tasks assigned:



If
the cancellation of the employment contract had occurred on December 31, 2010, the amount paid to Mr. Guerra would have been Euro 6.8 million.

There
are no agreements that provide for the allocation or maintenance of non-monetary benefits or the stipulation of ad hoc consultancy contracts in the event of termination
of the position of the Chief Executive Officer or the position of other executive directors. There are no agreements that provide compensation for non-competition commitments.

In
July 2008, Mr. Chemello's position as Chief Operations Officer of Luxottica was terminated. He remains a Director of Luxottica. As a result of this termination, Luxottica paid
Mr. Chemello an
indemnity and Mr. Chemello kept the stock options he had previously received, but forfeited his rights under the Performance Shares Plan. Portions of the indemnity due to Mr. Chemello
were paid in 2008 and 2009. The total amount of the indemnity paid was Euro 5,140,000.

Employees

As of December 31, 2010, we employed approximately 61,900 employees worldwide, of whom approximately 38,400 were employed in the United States and Canada,
7,400 were employed in Italy, 13,100 were employed in Asia-Pacific, 2,200 were employed in Europe and 800 were employed in subsidiaries located in other countries. As of such date,
approximately 19,200 were employed in our manufacturing and wholesale segment, approximately 41,500 were employed in our retail segment and approximately 1,200 were employed at our corporate offices.
Substantially all of our employees in Italy are covered by collective bargaining agreements. Other than those employees of Luxottica Retail North America Inc. subject to collective bargaining
agreements described below, none of our employees in the

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United
States are covered by collective bargaining agreements. We have enjoyed generally good relations with our employees.

Employment
agreements in Italy are generally collectively negotiated between the national association of companies within a particular industry and the respective national unions.
Individual companies must enter into contracts with their employees based on the relevant collective agreement. The agreement for optical workers, which is part of the national textile agreement,
covers approximately 7,500 of our employees. This agreement was renewed in 2010 resulting in an average wage increase rate of approximately two percent per year. In addition to the national collective
bargaining agreement for workers, we typically enter into separate local contracts with labor unions representing our employees. In December 2006, we renewed a local agreement with optical workers,
supplementing the terms of the national textile contract. The new agreement provided for new profitability targets for employee variable wages.

Italian
law provides that, upon termination of employment, employees are entitled to receive certain compulsory severance payments based on their compensation levels and length of
employment. As of December 31, 2010, we had established a reserve of Euro 37.8 million for such severance payments, which is reflected in our consolidated financial statements.

Luxottica
Retail North America Inc. ("Luxottica Retail N.A.") is currently a party to three collective bargaining agreements. Luxottica Retail N.A. collective bargaining agreement
with Local 108, Retail, Wholesale and Department Store union covers approximately 45 employees holding the positions of Lab Associate, Lead Lab Associate and Sales Associate. Luxottica Retail N.A.'s
collective
bargaining agreement with Local 84932 of the Communications Workers of America was extended to allow the parties to negotiate a new agreement. That agreement covers approximately 130 Pearle Vision and
LensCrafters employees holding the positions of Optician, Lab Associate, Lead Lab Associate and Sales Associate. Luxottica Retail N.A. is also party to a collective bargaining agreement with Local
888, United Food and Commercial Workers. This agreement covers approximately 15 Pearle Vision employees holding the positions of Lab Associate, Lead Lab Associate and Sales Associate. The current
agreement was in effect from January 1, 2010 through December 31, 2010 but has been extended while the parties negotiate a new agreement.

Share Ownership

Set forth below is certain information concerning the beneficial ownership of our ordinary shares as of April 15, 2011, by each of our directors and
executive officers who beneficially owns in excess of one percent of our outstanding ordinary shares.

Shares owned
as of
April 15, 2011Percentage
OwnershipStockholder

IssuerLeonardo Del Vecchio

Luxottica Group S.p.A.


312,653,339
(1)

66.98
%Luigi Francavilla

Luxottica Group S.p.A.


5,205,000
(2)

1.12
%


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Except
as otherwise indicated above, each of our directors and our executive officers owns less than one percent of our outstanding ordinary shares.

In
addition, set forth below is certain information regarding share ownership for our directors and our senior managers (who are not directors) as a group (including any shares held
directly or indirectly by each such person or such person's spouse), prepared and disclosed as required by applicable Italian law.

Shares held at the
beginning of 2010

Shares bought
during 2010

Shares sold
during 2010

Shares held at
the end of 2010StockholderLeonardo Del Vecchio


314,403,339
(1)




1,150,000
(2)

313,978,339
(3)Luigi Francavilla


3,505,000
(4)







3,505,000
(4)Enrico Cavatorta





300,000
(5)

300,000Roberto Chemello


1,077,875
(6)

200,000
(5)

200,000


1,077,875
(6)Claudio Del Vecchio


3,381,000
(7)







3,381,000
(7)Sabina Grossi


62,600








62,600Senior Managers as a group


210,605


881,500
(8)

881,500


210,605


In
addition to the holdings disclosed in the above chart, four senior managers employed by Luxottica's U.S. subsidiaries who participate in the Luxottica Group Tax Incentive Savings Plan
(the "Plan"), a company-sponsored 401(k) savings plan for Luxottica's U.S. employees, beneficially own Luxottica ADRs through interests in the Plan. As of December 31, 2009 and 2010, such
senior managers beneficially owned interests in the Plan equivalent to, in the aggregate, 9,717.9 ADRs and 9,884.6 ADRs, respectively. During 2010, such senior managers purchased and disposed of
interests in the Plan equivalent to, in the aggregate, 17,101.4 ADRs and 17,061.7 ADRs, respectively. The ADRs beneficially owned by Plan participants are held in the form of "units" of an investment
fund offered under the Plan and are allocated by the Plan administrator to participant accounts based on U.S. dollar allocation amounts specified by the participants, which may result in holdings of
fractional ADR investments.

In
March 1998, we adopted an employee stock option plan providing for the issuance of options covering up to 12,250,000 ordinary shares of nominal value Euro 0.06 each. As a
result of the change in the par value of our ordinary shares from Lire to Euro, which was approved by our stockholders at the

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annual
meeting held on June 26, 2001, the number of ordinary shares available for issuance under the plan was reduced to 10,798,642. Our Board of Directors administers the stock option plan.
The purpose of the plan is to provide additional incentives to our key employees. Grants under the stock option plan may be of non-qualified options and/or incentive stock options. Under
the plan, the Board of Directors may not grant an option for a term of more than nine years from the date of grant, or for a term that expires after March 31, 2011. The exercise price of these
options is equal to the market value of the underlying ordinary shares on the date of grant, defined as the higher of (i) the closing market price of our ADRs on the business day immediately
preceding the date of the grant, and (ii) the average of the closing market prices for each business day during the 30-day period ending on the date of the grant. Options granted
under the plan generally became exercisable in three equal installments beginning on January 31 of the year after the date of grant and expired nine years after such date. All the options
granted under this plan have either been exercised or have expired.

In
September 2001, we adopted an additional employee stock option plan providing for the issuance of options covering up to 11,000,000 ordinary shares of nominal value Euro 0.06
each. The purpose and administration of the 2001 stock option plan are similar to those of the 1998 stock option plan, with the only significant difference being that the latest option termination
date is March 31, 2017. Under the 2001 Option Plan, the option exercise price per share may not be less than the greater of (1) the closing market price of our ADSs on the NYSE on the
first business day immediately preceding the date of grant or (2) the average of the closing market price of the ADSs on the NYSE for each business day during the 30-day period
ending on the date of grant.

On
September 14, 2004, our Chairman and majority stockholder, Mr. Leonardo Del Vecchio, allocated shares previously held through La Leonardo Finanziaria S.r.l (subsequently
merged into Delfin S.à r.l.), a holding company of the Del Vecchio family, representing 2.06 percent (or 9.6 million shares) of the Company's authorized and
issued share capital as of April 15, 2011, to a stock option plan for our top management at an exercise price of Euro 13.67 per share (see Note 31 to the Consolidated Financial
Statements included in Item 18 of this annual report). The stock options to be issued under the stock option plan vested upon the achievement of certain economic objectives as of
June 30, 2006, and, as such, the holders of these options became entitled to exercise such options beginning on that date until their termination in 2014. No options were exercised in 2008 and
2009. During 2010, 1,150,000 options were exercised. As of December 31, 2010, 8,050,000 options were outstanding.

In
July 2006, we adopted an additional employee stock option plan providing for the issuance of options covering up to 20,000,000 ordinary shares of nominal value of Euro 0.06
each. The purpose of the plan is to provide additional incentives to key employees of the Group. Under the 2006 Option Plan, the option exercise price per share shall be the fair market value of an
ordinary share on the date of grant, which, for U.S. employees, is defined as the higher of (1) the arithmetic average of the official market price of our ordinary shares on the MTA during the
month ending on the day prior to the date of grant or (2) the official market price of our ordinary shares on the MTA on the trading day immediately preceding the date of grant. Options granted
under the plan generally become exercisable three years after the date of grant and expire nine years after such date.

In
May 2008, a performance shares plan for our top managers as identified by the Board of Directors (the "PSP Plan") was adopted. The PSP Plan is intended to strengthen the loyalty of
our key employees and to recognize their contributions to our success on a medium- to long-term basis. The beneficiaries of the PSP Plan will be granted the right to receive ordinary
shares ("Units"), without consideration, at the end of a three-year vesting period and subject to achievement of certain Company performance targets to be determined by our Board of
Directors. The PSP Plan will have a term of five years, during which the Board of Directors may resolve to issue different grants to the PSP Plan's beneficiaries. The PSP Plan covers a maximum of
6,500,000 ordinary shares. Each annual grant will not exceed 2,000,000 Units. On May 13, 2008, the Board of Directors granted a total maximum amount of 1,203,600 Units. On May 7, 2009,
the Board of Directors granted a total maximum amount of 1,793,750 Units. On April 29, 2010, the

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Board
of Directors granted a total maximum amount of 865,000 Units. Employees who received awards under the Plan were directors, officers and other managers with highly strategic roles who were
selected by the Board of Directors upon the direct recommendation of our Human Resources Committee. As of December 31, 2010, there were outstanding 1,017,600 units under the 2008 grant,
1,612,500 units under the 2009 grant and 852,500 units under the 2010 grant.

On
May 7, 2009, our Board of Directors authorized the reassignment of new options to employees who were then beneficiaries of the stock option grants approved in 2006 and 2007 and
held options with an exercise price, considering present market conditions and the financial crisis, that was significantly higher than the market price at such time, undermining the performance
incentives that typically form the foundation of these plans. The Board of Directors therefore approved the grant of new options to the beneficiaries of the abovementioned stock option grants, which
will be exercisableconditional upon the surrender of the options granted in 2006 and/or 2007at an exercise price determined pursuant to the provisions of the 2001 and 2006
Stock Option Plans and, therefore, consistent with the market values of Luxottica shares at the time of grant of the new options. The new options will vest in 2012, and, only for the May 7,
2009 extraordinary grant, will be subject to the achievement of certain Company financial performance targets.

In
connection with the reassignment of options to employees not domiciled in the United States:



The
reassignment of options for employees domiciled in the U.S. was structured as a tender offer. The offer expired on June 12, 2009. All outstanding eligible options that were
properly tendered under the reassignment program by eligible employees were accepted.

Pursuant
to the terms of the reassignment program, Luxottica accepted for cancellation options to purchase 3,725,000 ordinary shares, representing approximately 99.6 percent of the
shares underlying all eligible options held by U.S. employees. Of this amount, 825,000 shares were subject to options issued under the 2006 and 2007 stock option grants, while 2,900,000 shares were
subject to options issued under the 2006 3-year extraordinary performance stock option grant. Pursuant to the terms and conditions of the reassignment program, on June 12, 2009,
Luxottica issued new options to purchase an aggregate of 2,275,000 ordinary shares to U.S. employees who properly tendered eligible options, consisting of options issued under the Luxottica 2001 Stock
Option Plan to purchase an aggregate of 825,000 ordinary shares and new performance options issued under the Luxottica 2006 Stock Option Plan to purchase an aggregate of 1,450,000 ordinary shares
(equal to half the performance options previously granted). As of December 31, 2010, 100,000 of the 825,000 options issued under the Luxottica 2001 Stock Option Plan had been forfeited and all
remaining options were outstanding.

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The
new options issued under the Luxottica 2001 Stock Option Plan have an exercise price of Euro 15.03 per share. The new performance options issued under the Luxottica 2006 Stock
Option Plan have an exercise price of Euro 15.11 per share.

At
the Board of Directors meeting held on April 29, 2010, a total of 1,924,500 stock options were awarded under the 2006 Stock Option Plan to our employees and the employees of
our subsidiaries. As of December 31, 2010, 69,500 of these stock options had been forfeited.

As
of December 31, 2010, the following grants were outstanding as detailed below:

Number of
ordinary shares
underlying
options granted

Exercise price

Expiration date

Options held
by officers
and directors2002 Grant


2,348,400


U.S. $17.80


January 31, 2011


2003 Grant


2,397,300


Euro 10.51


January 31, 2012


8,1002004 Grant


2,035,500


Euro 13.79


January 31, 2013


328,1002004 Performance Grant


1,000,000


U.S. $18.59


January 31, 2012


40,0002004 Stockholder Grant


9,600,000


Euro 13.67


December 31, 2014


8,050,0002005 Grant


1,512,000


Euro 16.89


January 31, 2014


81,0002006 Grant(1)


1,725,000


Euro 22.19


January 31, 2015


70,0002006 Performance Grant 1(1)


3,500,000


Euro 22.09


July 27, 2015


2006 Performance Grant 2(1)


9,500,000


Euro 20.99


July 27, 2015


1,100,0002007 Grant(1)


1,745,000


Euro 24.05


March 6, 2016


2008 Grant


2,020,500


Euro 18.08


March 14, 2017


125,0002008 PSP Grant(2)


1,203,600


N/A


N/A


786,0002009 Non-U.S. Grant


378,000


Euro 13.45


May 7, 2018


90,0002009 U.S. Grant


672,000


Euro 14.99


May 7, 2018


2009 Non-U.S. Residents Reassignment, Ordinary


2,060,000


Euro 13.45


May 7, 2018


325,0002009 U.S. Residents Reassignment, Ordinary


825,000


Euro 15.03


March 31, 2017


200,0002009 Non-U.S. Residents Reassignment, Performance Grant


4,250,000


Euro 13.45


May 7, 2018


4,145,0002009 U.S. Residents Reassignment, Performance Grant


1,450,000


Euro 15.11


June 12, 2018


900,0002009 PSP Grant


1,793,750


N/A


N/A


1,225,0002010 Non-U.S. Residents Grant


1,221,000


Euro 20.72


April 29, 2019


70,0002010 U.S. Residents Grant


703,500


Euro 21.23


April 29, 2019


2010 PSP Grant


865,000


N/A


N/A


500,000


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Stock options and PSP Units held by directors and senior managers

Set forth below is certain information regarding stock options held by our directors and our senior managers (who are not directors) as
a group, prepared and disclosed as required by applicable Italian law.

Options held at the
beginning of 2010

Options granted
during 2010

Options exercised
during 2010

Options
expired/
waived
during 2010

Options held at the
end of 2010Name

Position

Number
of
Options

Average
exercise
price

Average
expiration
date

Number
of
Options

Average
exercise
price

Average
expiration
date

Number
of
Options

Average
exercise
price

Average
market
price at
exercise

Number
of
Options

Number
of
Options

Average
exercise
price

Average
expiration
dateLuigi Francavilla

Vice Chairman


140,500


€13.62


2016























140,500


€13.62


20162,000,000


€13.67


2014























2,000,000


€13.67


2014750,000


€13.45


2018
(*)






















750,000


€13.45


2018
(*)Andrea Guerra

Chief Executive


2,000,000


€13.67


2014























2,000,000


€13.67


2014Officer


1,250,000


€13.45


2018
(*)






















1,250,000


€13.45


2018
(*)Enrico Cavatorta

Chief Financial


93,500


€13.54


2016























93,500


€13.54


2016Officer and


1,200,000


€13.67


2014











300,000


€13.67


€21.02





900,000


€13.67


2014Director


550,000


€13.45


2018
(*)






















550,000


€13.45


2018
(*)Roberto Chemello

Director


140,500


€17.98


2014























140,500


€17.98


20142,000,000


€13.67


2014











200,000


€13.67


€22.05





1,800,000


€13.67


20141,100,000


€20.99


2015
(*)






















1,100,000


€20.99


2015
(*)Senior Managers


591,100


€14.20


n.a.


70,000


€20.72


2019


22,100


€13.38


€20.62





639,000


€14.95


n.a.employed in the


2,000,000


€13.67


2014











650,000


€13.67


€21.25





1,350,000


€13.67


2014Company (11 total)


1,400,000


€13.45


2018
(*)






















1,400,000


€13.45


2018
(*)Senior Managers


492,100


€14.83


n.a.











68,400


€14.51


€20.91





423,700


€15.23


n.a.employed in


180,000


€12.90


2012
(*)










140,000


€13.29


€20.91





40,000


€13.91


2012
(*)subsidiaries (8 total)


125,000


€13.45


2018
(*)






















125,000


€13.45


2018
(*)900,00


€15.11


2018
(*)






















900,000


€15.11


2018
(*)


*Options
are exercisable subject to the achievement of certain financial performance targets.


Set forth below is certain information regarding the PSP Units held by our directors and our senior managers (who are not directors) as a group as
of December 31, 2010:

Units held at the
beginning of 2010*

Units granted
during 2010*

Units exercised
during 2010

Units
expired
during
2010

Units held at the
end of 2010*Name

Position

Number
of
Units

Average
exercise
price

Average
expiration
date

Number
of
Units

Average
exercise
price

Average
expiration
date

Number
of
Units

Average
exercise
price

Average
market
price at
exercise

Number
of
Units

Number
of
Units

Average
exercise
price

Average
expiration
dateLuigi Francavilla

Vice Chairman


332,500





2012























332,500





2012Andrea Guerra

Chief Executive
Officer


615,000





2012


125,000





2013














740,000





2012Enrico Cavatorta

Chief Financial Officer
and Director


208,500





2012


50,000





2013














258,500





2012Senior Managers
employed in the
Company (11 total)


505,250





2012


168,750





2013














674,000





2012Senior Managers
employed in
subsidiaries (8 total)


349,750





2012


156,250





2013














506,000





2012


*Maximum
amount of Units granted to each beneficiary. The underlying shares that will be assigned without consideration may vary according to whether and the
degree to which the EPS targets set forth by the Board of Directors have been achieved. Each grant is subject to a 3-year vesting period. At the end of the respective vesting period, the
Board of Directors will evaluate the achievement of certain financial performance targets established by the Board of Directors for the purposes of the Performance Shares Plan.


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ITEM 7.    MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Major Stockholders

The following table sets forth, as of April 15, 2011, the beneficial ownership of ordinary shares by each person beneficially owning two percent or more of
the outstanding ordinary shares (including
ordinary shares represented by ADSs) known to us based on their most recent public filings or communications with us.

Amount of
Shares Owned

Percent
of ClassIdentity of Person or GroupLeonardo Del Vecchio


312,653,339


66.98
%Giorgio Armani


22,724,000
(1)

4.87
%


The
shares held by Mr. Del Vecchio and our other directors and executive officers have the same voting rights as the shares held by other stockholders.

Mr. Del
Vecchio is our controlling stockholder and serves as Chairman of our Board of Directors. We are not otherwise directly or indirectly owned or controlled by another
corporation or by any foreign government.

As
of March 31, 2011, approximately 7.59 percent of our ordinary shares were held in the form of ADSs by approximately 14,000 record holders.

To
the best of our knowledge, to date there are no arrangements which may result in a change of control of Luxottica Group S.p.A.

Related Party Transactions



We have a worldwide exclusive license agreement to manufacture and distribute ophthalmic products under the Brooks Brothers name. The
Brooks Brothers trade name is owned by Retail Brand Alliance, Inc. ("RBA"), which is controlled by Claudio Del Vecchio, one of our directors. The license expires on December 31, 2014 but
is renewable until December 31, 2019. Royalties paid to RBA for such agreement were Euro 0.8 million, Euro 0.3 million and Euro 0.8 million in the
years ended December 31, 2010, 2009 and 2008, respectively.

Management
believes that the terms of this license agreement are fair to the Company.



During the years ended December 31, 2010, 2009 and 2008, U.S. Holdings performed consulting and advisory services relating to
risk management and insurance for RBA. Amounts received for the services provided for those years were Euro 0.1 million, Euro 0.1 million and
Euro 0.1 million, respectively. Management believes that the compensation received for these services was fair to the Company.



On September 14, 2004, our Chairman and majority stockholder, Mr. Leonardo Del Vecchio, allocated shares previously held
through holding companies of the Del Vecchio family, representing 2.06 percent (or 9.6 million shares) of the Company's authorized and issued share capital as of April 15, 2011,
to a stock option plan for our top management. See Item 6"Directors, Senior Management and EmployeesShare Ownership."

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ITEM 8.    FINANCIAL INFORMATION

Financial Statements

See Item 18"Financial Statements."

Legal Proceedings

The Company and its subsidiaries are involved in the following legal and regulatory proceedings of which, unless already settled or otherwise concluded, the
timing and outcomes are inherently uncertain, and such outcomes could have a material adverse effect on the Company's business, financial position or operating results.



In June 2006, Cole and its subsidiaries were sued by a consumer in a class action that alleged various statutory violations related to
the operations of Pearle Vision, Inc. and Pearle VisionCare, Inc. in California. The plaintiff asserted various claims relating to the confidentiality of medical information and the
operation of Pearle Vision stores in California, including violations of California laws governing relationships among opticians, optical retailers, manufacturers of frames and lenses, and
optometrists, and other unlawful or unfair business practices. The parties entered into a settlement agreement, which provided for a store voucher at Pearle Vision or LensCrafters for each class
member and the payment of attorneys' fees and costs. On December 19, 2008, the court granted final approval of the settlement and entered final judgment. The settlement became final on
March 17, 2009.

Amounts
paid to settle this litigation and related costs incurred for the years ended December 31, 2010, 2009 and 2008, were not material. The effect of this settlement on the
Company's future operations and cash flow is not material.



On June 26, 2007, the Pipefitters Local No. 636 Defined Benefit Plan filed a class action complaint, on behalf of itself
and all other stockholders of Oakley, Inc. ("Oakley"), against Oakley and its Board of Directors in California Superior Court, County of Orange. The complaint alleged, among other things, that
the defendants violated their fiduciary duties to stockholders by approving Oakley's merger with Luxottica and claimed that the price per share fixed by the merger agreement was inadequate and unfair.
The defendants filed demurrers to the complaint, which the Court granted without prejudice. On September 14, 2007, the plaintiff filed an amended complaint containing the same allegations as
the initial complaint and adding purported claims for breach of the duty of candor. Because we believed the allegations were without merit, on October 9, 2007, the defendants filed a demurrer
to the amended complaint. Rather than respond to that demurrer, the plaintiff admitted that its claims were moot and on January 4, 2008 filed a motion for attorneys' fees and expenses. The
hearing for this motion took place on April 17, 2008. On May 29, 2008, the Court issued a ruling denying the plaintiff's motion for attorneys' fees and expenses in its entirety. The
Court did not rule on the defendants' demurrer to the amended complaint. On July 11, 2008, the Court entered an order dismissing the action with prejudice and denying the plaintiff's motion for
attorneys' fees and expenses. The plaintiff appealed the Court's May 29, 2008 ruling and the July 11, 2008 order. On January 11, 2010, the appellate Court affirmed the trial
Court's decision in all respects. The plaintiff filed a petition with the California Supreme Court requesting review of the appellate court's decision. The Supreme Court denied the plaintiff's
petition for review. Therefore, the appellate Court's decision affirming the denial of the plaintiff's request for attorneys' fees and expenses is now final for all purposes. The Company considers
this matter closed.

Costs
associated with this litigation incurred for the years ended December 31, 2010, 2009 and 2008, were not material.

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In January 2007, a complaint was filed against Oakley and certain of its subsidiaries in the United States District Court for the
Central District of California, alleging willful violations of the Fair and Accurate Credit Transactions Act related to the inclusion of credit card expiration dates on sales receipts. The plaintiff
brought suit on behalf of a class of Oakley's customers. Oakley denied any liability, and later entered into a settlement arrangement with the plaintiff that resulted in a complete release in favor of
the Oakley defendants, with no cash payment to the class members but rather an agreement by Oakley to issue vouchers for the purchase of products at Oakley retail stores during a limited period of
time. The settlement also provided for the payment of attorneys' fees and claim administration costs by the Oakley defendants. An order approving this settlement was entered on November 24,
2008. The settlement became final on January 15, 2009.

Amounts
paid to settle this litigation and related costs incurred for the years ended December 31, 2010, 2009 and 2008, were not material. The effect of this settlement on the
Company's future operations and cash flow is not material.



In May 2008, two individual optometrists commenced an action against LensCrafters, Inc. (now Luxottica Retail North
America Inc.) and Luxottica Group S.p.A. in the United States District Court for the Eastern District of Texas, alleging violations of the Texas Optometry Act ("TOA") and the Texas
Deceptive Trade Practices Act, and tortious interference with customer relations. The suit alleged that LensCrafters attempted to control the optometrists' professional judgment and that certain terms
of the optometrists' sub-lease agreements with LensCrafters violated the TOA. The suit sought recovery of a civil penalty of up to U.S. $1,000 for each day of a violation of the TOA,
injunctive relief, punitive damages and attorneys' fees and costs. In August 2008, plaintiffs filed a first amended complaint, adding claims for
fraudulent inducement and breach of contract. In October 2008, plaintiffs filed a second amended complaint seeking to certify the case as a class action on behalf of all current and former
LensCrafters sub-lease optometrists. Luxottica Group S.p.A. filed a motion to dismiss for lack of personal jurisdiction in October 2008. The court did not address that motion. The
case was transferred to the Western District of Texas, Austin Division, in January 2009, pursuant to the defendants' motion to transfer venue. On January 11, 2010, plaintiffs filed a motion
requesting that the court permit the case to proceed as a class action on behalf of all optometrists who sublease from LensCrafters in Texas.

On
February 8, 2010, the parties reached an agreement to settle the litigation on confidential terms. On March 8, 2010, the court dismissed the case with prejudice.

Costs
associated with this litigation for the years ended December 31, 2010, 2009 and 2008, were not material. The effect of this settlement on the Company's future operations and
cash flow is not material.



Our French subsidiary Luxottica France S.A.S., together with other major competitors in the French eyewear industry, has been
the subject of an anti-competition investigation conducted by the French Competition Authority relating to pricing practices in such industry. The investigation has concluded and, to date,
no formal action has yet been taken by the French Competition Authority. As a consequence, it is not possible to estimate or provide a range of potential liability that may be involved in this matter.
The outcome of any such action, which the Company intends to vigorously defend, is inherently uncertain, and there can be no assurance that such action, if adversely determined, will not have a
material adverse effect on our business, results of operations and financial condition.

*****

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The
outcome of the outstanding litigation claims described above, if any, is inherently uncertain, and there can be no assurance that one or more of these actions, if adversely
determined, will not
have a material adverse effect on our business, results of operations and financial condition. In addition, we may be subject to material claims, judgments or proceedings in the future which, if
adversely determined, may have a material adverse effect on our business, results of operations and financial condition. See Item 3"Key InformationRisk
FactorsIf we were to become subject to adverse judgments or determinations in legal proceedings to which we are, or may become, a party, our future profitability could suffer through a
reduction of sales or increased costs."

The
Company is a defendant in various other lawsuits arising in the ordinary course of business. It is the opinion of the management of the Company that it has meritorious defenses
against all such outstanding claims, which the Company will vigorously pursue, and that the outcome of such claims, individually or in the aggregate, will not have a material adverse effect on the
Company's consolidated financial position or results of operations.

Dividend Distributions

See Item 3"Key InformationDividends" and Item 10"Additional InformationRights Attaching to
Ordinary SharesDividends."

Significant Changes

Except as otherwise indicated above, no significant changes have occurred since the date of our Consolidated Financial Statements included in Item 18 of
this annual report.

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ITEM 9.    THE OFFER AND LISTING

Our ordinary shares were approved for trading on the Milan Stock Exchange on December 4, 2000. Our ADSs were admitted for
trading on the NYSE on January 24, 1990. Our ADSs are evidenced by ADRs issuable by Deutsche Bank Trust Company Americas, as depositary, pursuant to a Deposit Agreement.

The
table below sets forth, for the periods indicated, high and low closing prices of the ADSs on the NYSE (in U.S. dollars) and ordinary shares on the Milan Stock Exchange (in Euro).

New York Stock Exchange

Milan Stock Exchange(in U.S. $)

(in Euro)High

Low

High

Low2006


31.39


24.36


24.46


19.302007


39.38


29.70


28.79


21.332008


30.92


15.98


21.15


12.672009First Quarter


18.60


11.88


13.49


9.61Second Quarter


21.91


15.78


15.96


11.85Third Quarter


26.73


19.90


18.25


14.23Fourth Quarter


26.91


24.14


18.19


16.34Year 2009


26.91


11.88


18.25


9.612010First Quarter


27.59


24.22


20.09


17.91Second Quarter


29.42


22.98


21.89


18.36Third Quarter


27.28


22.59


20.60


17.82Fourth Quarter


30.62


26.57


23.17


19.64November 2010


29.84


26.57


21.15


20.00December 2010


30.62


26.81


23.17


20.43Year 2010


30.62


22.59


23.17


17.822011January 2011


31.44


29.81


23.49


22.14February 2011


31.10


29.58


22.51


21.64March 2011


32.78


29.50


23.40


21.31Through April 25, 2011


33.08


31.01


23.37


21.53


The
high and low closing prices of the ADSs on the NYSE for the first quarter of 2011 were U.S. $32.78 and U.S. $29.50, respectively. The high and low closing prices of the ordinary
shares on the Milan Stock Exchange for the first quarter of 2011 were Euro 23.49 and Euro 21.31, respectively.

ITEM 10.    ADDITIONAL INFORMATION

Articles of Association and Amended and Restated By-laws

Our Objectives

Our Articles of Association provide that Luxottica Group S.p.A.'s principal objectives are, among other things, (i) the
ownership and management of other companies or entities both in Italy and abroad, (ii) financing and managerial coordination of the owned companies and entities and (iii) providing
credit support for our subsidiaries. The Legislative Decree No. 58 of February 24, 1998 regulating the Italian

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financial
markets ("Decree No. 58") and our Amended and Restated By-laws contain, among other things, provisions to the following effect:

Directors

The Board of Directors is invested with the fullest powers for ordinary and extraordinary management of the company, except for the
acts that the law reserves for stockholders' meetings. Compensation of the directors is approved by the ordinary stockholders at the annual meeting of stockholders. The compensation of directors who
also serve as executive officers is determined by the Board of Directors with the favorable opinion of the Board of Statutory Auditors.

Directors
are not required to hold ordinary shares of Luxottica Group S.p.A. as a qualification for office.

Directors
are required to report to the other directors and to the Board of Statutory Auditors any transactions involving the Company in which such director or a party affiliated with
such director may have an interest. Our directors usually abstain from voting on matters in which they have an
interest (including their compensation), but there is no requirement under Italian law to abstain from such vote.

Rights Attaching to Ordinary Shares

Dividends

We are required to pay an annual dividend on the ordinary shares if approved by a majority of stockholders at the ordinary meeting that
must be held within the time specified by the law in force from time to time. Before dividends may be paid with respect to the results of any year in compliance with Italian law, an amount equal to
five percent of our net income for such year must be set aside to the legal reserve until the reserve, including amounts set aside during prior years, is equal to at least one-fifth of the
nominal value of our issued share capital. Dividends can only be distributed out of realized profits, resulting from regularly approved financial statements. In cases where losses have reduced the
Company's share capital, dividends cannot be distributed until the share capital has been restored or reduced accordingly. See Item 3"Key InformationDividends."

Future
determinations as to dividends will depend upon, among other things, our earnings, financial position and capital requirements, applicable legal restrictions and such other
factors as the Board of Directors and stockholders may determine. Dividends are usually paid in accordance with the dates set annually by Borsa Italiana S.p.A. Dividends which are not collected
within five years from the date on which they become payable are forfeited in favor of the Company. Dividends are paid to those persons who hold the ordinary shares through an intermediary on a
dividend payment date declared at the stockholders' meeting. The intermediary, upon request by the stockholder, issues a certified statement of account allowing the stockholder to collect the
dividends.

If
dividends are not distributed and an appropriate reserve is created, the stockholders can adopt a resolution, at an extraordinary meeting, to convert such reserve into capital. In
this case, the shares resulting from the increase are attributable to the stockholders without additional consideration in proportion to their ownership before the increase.

Notification of the Acquisition of Shares and Voting Rights

Pursuant to Italian securities laws and Consob (the Italian securities regulatory authority) implementing regulations thereof, any
person acquiring any interest in excess of two percent in the voting shares of a listed company must give notice to Consob and the company whose shares are acquired. Consob may, in order to protect
investors and the efficiency and transparency of the capital markets, impose, for a limited period of time, a threshold lower than two percent in the voting shares of a listed company with an elevated
current market value and a particularly widely held stock. The voting

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rights
attributable to the shares in respect of which notification has not been made shall not be exercised. Any resolution taken in violation of the foregoing may be annulled if the resolution would
not have been passed in the absence of such votes.

In
addition, any person whose aggregate actual shareholding in a listed company exceeds or falls below two percent, five percent, ten percent, 15 percent, 20 percent,
25 percent, 30 percent, 35 percent, 40 percent, 45 percent, 50 percent, 66.6 percent, 75 percent, 90 percent or 95 percent of the
listed company's voting share capital is obligated to notify Consob and the listed company whose shares are acquired or disposed of. For the purpose of calculating these ownership thresholds, shares
owned by any person, irrespective of whether the relative voting rights are exercisable by such person or by a third party or are suspended, are taken into consideration and, except in certain
circumstances, account should also be taken of shares held through, or shares the voting rights of which are exercisable by, subsidiaries, fiduciaries or intermediaries. Anyone holding financial
instruments that, pursuant to a binding agreement, grant the right to acquire voting shares, on the holder's own initiative and through a physical settlement, must notify the Company and Consob if
such "potential" holding reaches, exceeds or falls below the following percentage thresholds: 2, 5, 10, 15, 20, 25, 30, 50 and 75. If shares can be acquired as a consequence of the exercise of
conversion rights or warrants, such shares are included in the "potential" holding only if the purchase can take place within 60 days. Moreover, any holder of a "potential" holding, or an
actual share holding, exceeding 2 percent must notify Consob and the Company whenever such holder also holds financial instruments that, pursuant to a binding agreement, grant the right to sell
voting shares, on the holder's own initiative and through a physical settlement, and the underlying shares reach, exceed or fall below the following percentage thresholds: 2, 5, 10, 15, 20, 25, 30, 50
and 75. Notification should be made (except in certain circumstances) within five trading days.

Disclosure
obligations also apply to listed companies whenever they hold, directly or through subsidiaries, their own shares and whenever their holdings exceed or fall below the relevant
thresholds.

Cross
ownership between listed companies may not exceed two percent of their respective voting shares and cross ownership between a listed company and an unlisted company may not exceed
two percent of the voting shares of the listed company and ten percent of the voting shares of the unlisted company. If the relevant threshold is exceeded, the company which is the latter to exceed
such threshold may not exercise the voting rights attributable to the shares in excess of the threshold and must sell the excess shares within a period of twelve months. If the company does not sell
the excess shares within twelve months, it may not exercise the voting rights in respect of its entire shareholding. If it is not possible to ascertain which is the later company to exceed the
threshold, subject to any different agreement between the two companies, the limitation on voting rights and the obligation to sell the excess shares will apply to both of the companies concerned. The
two percent limit for cross ownership is increased to five percent on the condition that such limit is only exceeded by the two companies concerned following an agreement authorized in advance by an
ordinary stockholders' meeting of each of the two companies. Furthermore, if a party holds an interest in excess of two percent of a listed company's share capital, such listed company or the party
which controls the listed company may not purchase an interest above two percent in a listed company controlled by the first party. In case of non-compliance, voting rights attributable to
the shares held in excess may not be exercised. If it is not possible to ascertain who the later party to exceed the limit is, the limitation on voting rights will, subject to different agreement
between the two parties, apply to both. Any stockholders' resolution taken in violation of the limitation on voting rights may be annulled by the relevant court if the resolution would not have been
passed in the absence of such votes. The foregoing provisions in relation to cross ownership do not apply when the thresholds are exceeded following a public tender offer to buy or exchange at least
60 percent of the company's shares.

The
validity of any agreement regarding the exercise of the voting rights attached to shares of a listed company or of its parent company is subject to the notification of such agreement
to Consob and to the relevant issuer, the publication of a summary of such agreement in the press and the filing of the

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agreement
with the Register of Enterprises within five days of the date of the agreement. These disclosure obligations shall not apply to agreements regarding shareholdings representing less than two
percent of the voting shares of the listed company. Failure to comply with the foregoing requirements will render the agreement null and void and the voting rights of the relative shares cannot be
exercised.

The
agreements subject to the above include those which: (i) regulate the exercise of, or prior consultation for, the exercise of voting rights in a listed company or its
controlling company; (ii) contain limitations on the transfer of shares or securities which grant the right to purchase or subscribe for shares; (iii) provide for the purchase of shares
or securities mentioned in (ii); (iv) have as their object or effect the exercise (including joint exercise) of a dominant influence over the company; or (v) aim to encourage or
frustrate a takeover bid or equity swap, including commitments relating to non-participations in a takeover bid.

Any
agreement of the nature described above can have a legal maximum term of three years (and may be renewed for an additional three-year term at its expiration), and if
executed for a longer term shall otherwise expire three years after its execution. Any such agreement executed for an unlimited term can be terminated by a party upon six months' prior notice. In the
case of a public tender offer, stockholders who intend to participate in the tender offer may withdraw from the agreement without notice. Consob Regulation 11971/99 contains provisions which
govern the method and content of the notification and publication of the agreements as well as any subsequent amendments thereto.

General Meetings

Meetings of the stockholders may be held at our executive offices in Italy, in any country in the European Union or in the United
States, following publication of notice of the meeting, including the agenda, on the Company's website and, if required by law, in one or more of the following daily newspapers: "Il Sole 24Ore", "Il
Corriere della Sera" or "la Repubblica", at least 30 days before the date fixed for the meeting. The notice shall contain a list of the subject matters to be dealt with at the meeting, as well
as a description of the procedures to be complied with in order to attend, and vote in, such meeting. Within the same time period, the Board of Directors shall also publish: (i) reports
describing the subject matters to be dealt with at the meeting, by making them available both at the Company's registered office and on its website; and (ii) all of the documents that will be
submitted to the stockholders during the meeting, the forms that stockholders may use for the appointment of proxies and information about the Company's share capital, by making these materials
available on the Company's website.

Deutsche
Bank Trust Company Americas will mail to all record holders of ADRs a notice containing a summary of the information contained in any notice of a stockholders' meeting received
by Deutsche Bank Trust Company Americas. See "Documents on Display."

Meetings
of stockholders may be either ordinary meetings or extraordinary meetings. Stockholders' meetings may be called by the Board of Directors or the Board of Statutory Auditors. In
the case of a listed company in Italy, stockholders' meetings must be promptly convened upon the request of holders representing at least 1/20th of the share capital, provided that the request
contains a summary of the matters to be discussed. The Board of Directors may, however, resolve not to convene a meeting if they deem it to be in the Company's interest. In this case, the competent
court, on appeal by the stockholders who have asked for such meeting, can order by decree, after having conferred with the Board of Directors and the Board of Statutory Auditors, that such meeting be
convened. Stockholders' meetings may not be convened upon the request of stockholders whenever the matter to be dealt with at such meeting requires a proposal, a presentation document or a report by
the Board of Directors.

Holders
of ordinary shares are entitled to attend and vote at ordinary and extraordinary stockholders' meetings. Each holder is entitled to cast one vote for each ordinary share held.
Votes may

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be
cast personally or by proxy, in accordance with applicable Italian regulation. However, the voting rights of ordinary shares held in breach of applicable law may in some cases not be exercised.

Ordinary
stockholders' meetings must be convened at least once a year to approve the annual financial statements of Luxottica Group S.p.A. Our By-laws provide that the
meeting for the approval of the financial statements can be convened within the time specified by the law in force from time to time. The drafts of the statutory financial statements and consolidated
financial statements shall be filed and published within 120 days from the end of the fiscal year. Financial statements shall be published and filed at least 21 days before the meeting
called to approve them.

At
ordinary stockholders' meetings, stockholders vote upon dividend distributions, if any, appoint the Directors, Statutory Auditors and external auditors, determine their remuneration
and vote on business matters submitted by the Directors.

The
quorum required, in person or by proxy, for an ordinary meeting, upon first notice is at least 50 percent of the total number of issued and outstanding ordinary shares, while
on second call there is no quorum requirement. Resolutions at ordinary meetings may be adopted, in first and second calls, by a simple majority of ordinary shares represented at such meeting.

To
the extent provided by law, within ten days from the publication of the agenda, stockholders who represent at least 1/40th of the share capital may request a supplement of the
agenda, indicating the additional subject matters such stockholders wish to be dealt with at the meeting. Within the same time period, the stockholders requesting the supplement of the agenda shall
prepare and deliver to the Board of Directors a report on the additional matters to be discussed.

Stockholders
may present questions with regard to the subject matters listed in the agenda, to which the Company shall reply no later than during the meeting.

The
Board of Directors, composed, in accordance with the By-laws, of not less than five and not more than 15 directors, shall be appointed by the stockholders at the ordinary
meeting on the basis of lists presented by stockholders pursuant to the procedures indicated below.

A
list for the appointment of directors can be presented only by those stockholders who, alone or jointly with other presenting stockholders, at the time of the presentation of the list,
hold an aggregate interest at least equal to the percentage established by Consob pursuant to article 147ter subparagraph 1 Legislative Decree 58/98. For 2009, the percentage established
by Consob for Luxottica was equal to 1 percent. Each stockholder may not submit or contribute to submitting, by means of trust or proxy, more than one list. The lists shall set forth not more than
fifteen candidates, listed in descending numerical order.

The
lists shall be submitted to the Company at least 25 days before the date of the stockholders' meeting convened to appoint the directors and published by the Company at least
21 days before the date of such meeting.

The
lists shall be signed by the stockholder or stockholders submitting them and presented together with the professional resumes of the candidates and the written statements of the
candidates in which they declare that they accept the office and confirm, under their own responsibility, that there are no grounds under any law or regulation for their ineligibility or
incompatibility and that they meet any requirements prescribed in the respective lists.

Pursuant
to article 147ter, subparagraph 4, Legislative Decree 58/1998, at least one director, or in the event the Board of Directors is composed of more than seven
members, then at least two directors, must fulfill the necessary requirements to be considered "independent" in accordance with article 147ter (hereinafter "147ter Independent Director").

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Each
list shall contain, and expressly name within the first seven candidates named in the list, at least one 147ter Independent Director, and if the list is composed of more than seven
candidates, such list shall contain and expressly name a second 147ter Independent Director. If appropriate, each list may also expressly name directors having the requirements of independence as
provided for by the codes of conduct established by companies managing regulated markets or industry associations.

No
candidate may appear on more than one list.

At
the end of voting, the candidates from the two lists that have obtained the highest number of votes will be elected, according to the following criteria:



In
the event of a tie with respect to the top two lists, the ordinary meeting will proceed to take a new vote on only the top two lists.

If
only one list is submitted, the ordinary meeting will cast its votes on it and, if the list receives a simple majority of votes, the candidates listed in descending numerical order
will be elected as directors, until the requisite number, as determined by the ordinary meeting, is reached, subject to the obligation of the ordinary meeting to appoint a minimum number of 147ter
Independent Directors. The candidate listed first on the Majority List will be elected as Chairman of the Board of Directors.

If
there are no lists, the Board of Directors will be appointed by the ordinary meeting with such majorities as required by law.

The
Board of Statutory Auditors, composed, in accordance with the By-laws, of three regular auditors and two alternate auditors, shall be appointed by the stockholders at the
ordinary meeting on the basis of lists presented by stockholders pursuant to the procedures indicated below.

The
appointment of one regular Statutory Auditor, as Chairman, and of one alternate Statutory Auditor shall be reserved for the stockholders who presented or voted the Minority List, who
must not be related, directly or indirectly, to the stockholders who presented or voted the Majority List.

Pursuant
to article 27 of our By-laws a list for the appointment of Statutory Auditors can be presented only by those stockholders who, alone or jointly with other
presenting stockholders, at the time of the presentation of the list, hold an aggregate interest at least equal to the one established by Consob pursuant to article 147-ter,
subparagraph 1, of legislative decree 58/98. For 2009, the year in

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which
the Board of Statutory Auditors was appointed, the percentage established by Consob for Luxottica was equal to 1 percent.

The
lists shall be filed at the registered office of the Company at least 25 days prior to the stockholders' meeting called for the appointment of the Statutory Auditors and published by
the Company at least 21 days before the date of such meeting.

The
lists shall indicate the name of one or more candidates to be appointed as regular Auditors and alternate Auditors.

The
name of each candidate shall be marked in a descending numerical order in each section (section of regular Auditors and section of alternate Auditors) and the candidates listed shall
not be more than the members of the body to be appointed.

The
lists shall also include the following:



In
the event that only one list is submitted or only related-party stockholders, as determined by applicable law, submit lists as of the last day provided for the presentation of such
lists, it is possible to present a list until the fourth day following such date, or such other time period provided by law. In such case, the above share interest thresholds providing for the
presentation of the lists shall be reduced by half.

A
stockholder cannot submit and vote for more than one list, including through third parties or by means of trust companies. Stockholders belonging to the same group and stockholders
signing a stockholders' agreement regarding the shares of the listed company shall not present or vote for more than one list including through third parties or by means of trust companies. Each
candidate shall present only one list subject to ineligibility.

The
appointment of the statutory auditors shall occur according to the following criteria:



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If
only one list is submitted, the ordinary meeting shall vote on it and, if the same list obtains the majority of the voting persons, without including those abstaining from voting, all
the candidates included in such list shall be appointed. In such case the Chairman of the Board of the Statutory Auditors shall be the first regular statutory auditor.

Extraordinary
meetings of stockholders may be called to vote upon, among other things, proposed amendments to the By-laws, capital increases, mergers, spin-offs,
issuance of debentures, appointment of receivers and similar extraordinary actions. Extraordinary stockholders' meetings shall be properly convened when, in the case of the first meeting, stockholders
representing at least one-half of our share capital are present at the meeting, and in the case of the second and third (and any subsequent) meetings, stockholders representing,
respectively, more than one-third and one-fifth of our share capital are present at the meeting. Resolutions are adopted on first, second and third call of extraordinary
stockholders meetings with the affirmative vote of holders of at least two-thirds of the shares represented at the meeting.

Pursuant
to our By-laws, subject to the concurrent competence of the extraordinary meeting of stockholders, the Board of Directors also has the authority over resolutions in
connection with mergers and demergers in accordance with Articles 2505 and 2505-bisand
2506-terof the Civil Code, the establishment or termination of branches, the determination of which directors shall be authorized to
represent the Company, the reduction of the outstanding capital stock in the event of withdrawal of a stockholder, the amendment of the By-laws to comply with legal requirements, or the
transfer of the principal place of business within the national territory.

The
meeting notice period of 30 days is: (i) increased to 40 days for meetings convened to appoint directors and Statutory Auditors; and (ii) reduced to,
respectively, 21 days for meetings convened to resolve upon the Company's dissolution or upon the resolutions following a reduction of the
Company's share capital below the mandatory minimum threshold provided by law, and 15 days for meetings convened pending a public tender offer launched with respect to our ordinary shares. The
notice may specify a date for a second meeting in the event that a quorum is not obtained at the first meeting. Notice of any subsequent meeting that must be held within 30 days from the
previously adjourned meeting, must be published at least eight days prior to the date of the meeting. In addition, a meeting will be deemed duly convened if stockholders representing
100 percent of Luxottica Group S.p.A.'s share capital, together with a majority of the members of the Board of Directors and the Board of Statutory Auditors, are present at the meeting.

The
right to attend, and to vote in, a meeting is certified by a statement issued by the intermediary where the relevant stockholder holds the account to which the Company's shares are
registered. The above-mentioned rights may be exercised by those holding Luxottica Group S.p.A. shares at the end of the seventh business day preceding the date of the meeting. The
intermediary's statement shall be delivered to the Company within three business days prior to the date of the meeting.

The
Company updates the stockholders' register on the basis of the statements sent by the intermediaries, within 30 days from their receipt. Information contained in the
stockholders' register shall be made available to all stockholders upon their request.

Stockholders
may appoint proxies. A proxy may also be granted by electronic means, in accordance with the requirements set forth in the Set of Rules of the Ministry of Justice.
Electronic notice of the proxy may be given, pursuant to the procedure set forth in the call notice, either by using a specific section of the Company's website, or, if contemplated in the call
notice, by sending the document to the certified electronic mail address of the Company. If the representatives deliver or send a copy of the proxy they shall certify under their responsibility the
identity of the proxy and that the proxy conforms to the original.

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Proxies
may be appointed even though they have a conflict of interest, provided that they have informed the stockholder about such conflict of interest and have received specific
instructions on the votes to be exercised for each subject matter in the agenda.

Proxies
who do not have a conflict of interest may express votes that are inconsistent with the instructions received by the relevant stockholder if, and only if, new and relevant
circumstances arise during the meeting and it is reasonable to believe that the stockholder would have changed its mind in light of said circumstances. In this case, proxies must declare that they are
expressing votes that are inconsistent with the instructions received and explain the reasons for doing so.

Unless
the By-laws specifically provide otherwise, the Company shall indicate in the notice of the meeting an individual to whom stockholders may grant proxies for one or
more of the subject matters listed in the agenda.

If
the solicitation is addressed to more than 200 stockholders and concerns specific voting proposals or contains recommendations or other declarations that might influence the exercise
of voting rights, it is subject to the provisions of legislative decree n. 58/98; in particular, the stockholder(s) making the solicitation shall publish a prospectus and a proxy form.

Proxies
may be collected by a stockholders' association provided that such association has been formed by certified private agreement, does not carry out business activities and is made
up of at least 50 individuals each of whom owns no more than 0.1 percent of our voting capital.

Proxies
may be revoked and can be appointed only for a single stockholders' meeting already convened. Proxies can be appointed also for a single subject matter listed in the agenda or
with regard to a single voting proposal in the case of a solicitation.

Our
By-laws do not contain any limitations on the voting rights in respect of ordinary shares held by any stockholder. Resolutions adopted at a stockholders' meeting are
binding on all stockholders. However, each absent, dissenting or abstaining stockholder (as well as any Director or Statutory Auditor) has the right, under Italian law, to ask a court to annul
resolutions taken in violation of applicable laws or the By-laws. In addition, in a limited number of cases (including the merger of a listed company with, and its incorporation into, an
unlisted company) applicable law grants dissenting and absent stockholders the right to obtain the redemption of their shares by the issuer at the average market price of the shares during the
previous six-month period. A redemption can be effected either by utilizing the available reserves of the issuer (in which case the shares may be held and registered in the name of the
issuer) or alternatively by a reduction of share capital of the issuer.

Within
five days from each stockholders' meeting, a brief report on the votes expressed at the meeting shall be published on the Company's website. Within 30 days from each
stockholders' meeting, the minutes of such meeting shall be made available on the Company's website.

Option Rights

Pursuant to Italian law, holders of ordinary shares are entitled to subscribe for issuances of shares, debentures convertible into
shares and rights to subscribe for shares in proportion to their holdings, unless such option rights are waived or limited by a stockholders' resolution adopted by the affirmative vote of holders of
more than 50 percent of the ordinary shares and such waiver or limitation is in the interest of Luxottica Group S.p.A. Particular Italian regulations set forth the procedures to be
followed by Italian listed companies in such circumstances.

It
is likely that the option rights generally available to holders of ordinary shares may not be fully available to holders of ADRs. See "Description of American Depositary
ReceiptsShare Dividends and Other Distributions."

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Pursuant to Decree n. 58/98, in the event that: (i) the newly issued shares are offered for subscription to our employees or employees of our subsidiaries;
and (ii) the new shares to be issued by us for subscription by the aforementioned parties do not exceed one percent of our share capital, the resolution excluding option rights is to be
approved by stockholders representing the majority required for extraordinary meetings.

Pursuant
to Italian law, such option rights may be excluded in certain other cases, including contributions in kind.

Preferential Shares

Under Italian law, a company such as ours may issue shares that have a preference over ordinary shares with respect to the distribution
of dividends or surplus assets. At present, we have no such preferential shares outstanding and any issuance of such shares would be subject to approval by a majority of stockholders.

Rights on Liquidation

On a liquidation or winding-up of the company, subject to the preferential rights of holders of any outstanding
preferential shares, holders of ordinary shares will be entitled to participate in any surplus assets remaining after payment of the creditors. Shares rankpari
passuamong themselves in liquidation.

Purchase of Shares by Luxottica Group S.p.A.

We and our subsidiaries may purchase up to an aggregate of 1/5th of our ordinary shares, subject to certain conditions and
limitations provided by Italian law, including that the purchase be approved by stockholders. Shares may only be purchased out of profits available for dividends and distributable reserves as
appearing in the latest stockholder-approved unconsolidated financial statements. Further, we may only repurchase fully paid shares. As long as such shares are owned by us, they would not be entitled
to dividends nor to subscribe for new ordinary shares in the case of capital increases, and their voting rights would be suspended. A corresponding reserve must be created in our balance sheet which
is not available for distribution.

Decree
n. 58/98 provides that the purchase by a listed company of its own shares and the purchase of shares of a listed company by its subsidiary must take place by way of a public offer
or on the market in a manner agreed with Borsa Italiana S.p.A. which must ensure the equality of treatment among stockholders, subject to certain limitations. The foregoing does not apply to
shares being purchased by a listed company from its employees or employees of its parent company or subsidiaries under certain circumstances.

See
Item 16E"Purchases of Equity Securities by the Issuer and Affiliated Purchasers."

Minority Stockholders' Rights

An absent or dissenting stockholder (representing 1/1000th of the share capital of the Company) may, within three months, ask a
court to annul stockholders' resolutions taken in violation of applicable laws or our By-laws. Any stockholder may bring to the attention of the Board of Statutory Auditors facts or acts
which are deemed wrongful. If the stockholder (or stockholders) that have submitted the complaint to the Board of Statutory Auditors represent more than 1/50th of our share capital, the Board
of Statutory Auditors must investigate without delay and report its findings and recommendations at the stockholders' meeting.

Stockholders
representing more than 1/20th of our share capital have the right to report major irregularities to the relevant court. In addition, stockholders representing at
least 1/40th of our share

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capital
may initiate a liability suit against the directors, Statutory Auditors and general managers of Luxottica Group S.p.A. We may waive or settle the suit only if less than five percent of
the stockholders vote against such waiver or settlement. We will reimburse the legal costs of such action in the event that the claim of such stockholders is successful and (i) the court does
not award such costs against the relevant directors, Statutory Auditors or general managers, or (ii) such costs cannot be recovered from such directors, Statutory Auditors or general managers.
In compliance with decree n. 58/98, our By-laws give minority stockholders the right to appoint directors and one Statutory Auditor as chairman and one Alternate Auditor to the Board of
Statutory Auditors. See Item 6"Directors, Senior Management and EmployeesDirectors and Senior Management."

Italian Tender Offer Rules

Under legislative decree n. 58/98, a public tender offer is required to be launched by any person that through share purchases holds
more than 30 percent of the voting stock of an Italian listed company. The public tender offer must cover the whole voting stock of the company. Similarly, under Consob rules, a public tender
for the entire voting stock of a listed company must be made by any person owning more than a 30 percent interest in the voting securities of a company (but does not exercise majority voting
rights at an ordinary stockholders' meeting) and purchases or acquires, directly or indirectly, also through the exercise of subscription or conversion rights, during a 12-month period
more than five percent of the ordinary capital with voting rights. For the purpose of calculating the 30 and 5 percent thresholds, the
following are taken into account: (i) shares directly or indirectly purchased; and (ii) in certain cases, derivative instruments (either physically or cash settled) whose underlying
shares are part of the voting stock of an Italian listed company.

The
offer must be launched within 20 days from the date on which the relevant threshold was exceeded, and must be made at a price for each class of securities at least equal to
the highest price paid by the offeror, and/or by parties acting in concert with the offeror, for the purchase of the relevant class of the target company's securities over a 12-month
period preceding the announcement of the compulsory bid. If no purchases for value of the relevant class of securities have been made in the relevant period, the offer price will be equal to the
weighted average market price of the target securities over the previous 12 months (or, if a market price for the relevant class of securities has not been available for the whole of this
period, over such shorter period for which a market price has been available). In a case where the relevant thresholds are reached through derivative instruments, the reference price of the underlying
shares and any consideration paid by the holder shall be taken into account in calculating the offer price.

Consob
regulates these provisions in greater detail through a number of exemptions from the duty to launch a tender offer. Such exemptions include, among others: (i) when another
person or persons jointly hold the majority of voting rights that can be exercised at the general meeting; and (ii) when the relevant thresholds are reached as a result of the recapitalization
of a company that is in a situation of financial crisis or as a result of the exercise of options, or conversion or subscription rights.

Article 107
of the legislative decree further provides that the acquisition of an interest above 30 percent of the voting stock of a company does not trigger the obligation
to launch a 100 percent tender offer if the person concerned has exceeded the threshold as a result of a public tender offer launched on 60 percent or more of the voting stock of the
company. This provision is available only (i) if the tender offer is conditional on the acceptance by a majority of the stockholders of the company (excluding, for the purpose of calculating
such majority, the offeror or any stockholder that holds an absolute or relative majority shareholding exceeding ten percent as well as persons acting in concert with the offeror), (ii) if the
offeror (including the persons acting in concert with the offeror) has not acquired more than one percent of the voting stock of the company in the preceding 12 months and during the offer
period and (iii) upon receipt of an exemption granted by Consob provided that the terms of (i) and (ii) above are met.

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"Persons
acting in concert" with the offeror shall mean any person cooperating with another on the basis of a specific or tacit agreement, verbal or in writing, regardless of whether
such agreement is invalid or without effect, for the purpose of acquiring, maintaining or strengthening control over the issuer or to defend against a public tender offer (including, in any case, the
offeror's subsidiaries,
controlling persons, related companies and other persons connected to it by virtue, among other things, of a stockholders' agreement, the offeror's directors, members of the management board, or
supervisory board or general managers). Consob has further identified cases in which the "action in concert" is presumed, although rebuttal is possible (for example, in the case of a person and his or
her relatives), as well as cases not amountingper seto an "action in concert" (such as, for example, the agreement between shareholders for the
submission of a slate to appoint minority directors).

After
the offer has been completed, the offeror nevertheless becomes subject to the duty to launch an offer for 100 percent of the voting stock if, in the course of the subsequent
12 months, (i) it (including the persons or entities acting in concert with the offeror) has purchased more than one percent of the voting stock of the company, or (ii) the
company has approved a merger or spin-off. Finally, anyone holding 90 percent or more of the voting stock of a company must grant to all other stockholders the right to sell off
their remaining shares, unless an adequate distribution of the shares is resumed so as to ensure proper trading within a period of three months. Moreover, any person who, following a tender offer for
100 percent of the voting stock, purchases more than 95 percent of the voting stock: (i) must grant to all other stockholders the right to sell their voting shares; or
(ii) alternatively, and provided that it has stated its intention to do so in the offering documentation, is entitled to acquire all remaining voting shares of the company
(squeeze-out) within three months following the conclusion of the tender offer.

Shares
held in breach of the obligations to launch a mandatory tender offer cannot be voted and must be sold within 12 months.

Derivative Suits

Under Italian law, action against members of the Board of Directors, members of the Board of Statutory Auditors and General Managers of
a company may be brought on behalf of the company if authorized by a resolution adopted at an ordinary meeting of stockholders. In respect of listed companies, Italian law provides for a form of
stockholders' action against members of the Board of Directors, which may be brought by holders of at least 1/40th of the outstanding shares. We are allowed not to commence, or to settle, the
suit provided that stockholders representing at least five percent of the issued and outstanding shares do not vote against a resolution to this effect. We will reimburse the legal costs of such
action in the event that the claim of such stockholders is successful and (i) the court does not award these costs as part of the judgment against the relevant directors, Statutory Auditors or
general managers or (ii) these costs cannot be recovered from such directors, Statutory Auditors or general managers. In addition, Italian law permits a stockholder acting alone to bring an
action against members of the Board of Directors in the event that such stockholder has suffered damages directly related to negligence or willful misconduct.

No Limitation of Ownership

Neither Italian law nor any of our constituent documents impose any limitations on the right of non-resident or foreign
stockholders to hold or exercise voting rights on our ordinary shares or the ADSs.

Description of American Depositary Receipts

The following is a summary of certain provisions of the Amended and Restated Deposit Agreement (the "Deposit Agreement"), dated as of March 30, 2006, among
Deutsche Bank Trust Company Americas, as depositary, the owners and holders from time to time of ADRs issued thereunder and us.

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This
summary does not purport to be complete and is qualified in its entirety by reference to the Deposit Agreement, a copy of which has been filed as an exhibit to this annual report. For more
complete information, the entire agreement should be read. Copies of the Deposit Agreement are available for inspection at the principal Corporate Trust Office of Deutsche Bank Trust Company Americas
at 60 Wall Street, New York, New York 10005.

ADRs
are issued by Deutsche Bank Trust Company Americas. Each ADR evidences an ownership interest in a number of American Depositary Shares, each of which represents one ordinary share
deposited with Deutsche Bank Milan, as custodian under the Deposit Agreement. Each ADR will also represent securities, cash or other property deposited with Deutsche Bank Trust Company Americas but
not distributed to ADR holders. Deutsche Bank Trust Company Americas' Corporate Trust Office is located at 60 Wall Street, New York, New York 10005, and its principal executive office is located at 60
Wall Street, New York, New York 10005.

Share Dividends and Other Distributions

Deutsche Bank Trust Company Americas has agreed to pay to ADR holders the cash dividends or other distributions it or the custodian
receives on ordinary shares or other deposited securities, after deducting its fees and expenses.

Cash

Deutsche Bank Trust Company Americas converts any cash dividend or other cash distribution we pay on the ordinary shares into U.S.
dollars, if it can do so on a reasonable basis and can transfer the U.S. dollars to the United States. If it is not possible for Deutsche Bank Trust Company Americas to convert foreign currency in
whole or in part into U.S. dollars, or if any approval or license of any government is needed and cannot be obtained, Deutsche Bank Trust Company Americas may distribute the foreign currency to, or in
its discretion may hold the foreign currency uninvested and without liability for interest for the accounts of, ADR holders entitled to receive the same.

Shares

Deutsche Bank Trust Company Americas will, unless otherwise requested by us, distribute new ADRs representing any shares we may
distribute as a dividend or free distribution. Deutsche Bank Trust Company Americas will only distribute whole ADRs. It will sell shares which would require it to issue a fractional ADR and distribute
the net proceeds in the same way as it does with dividends or distributions of cash. If Deutsche Bank Trust Company Americas does not distribute additional ADRs, each ADR will also represent the
additional deposited shares.

Rights to Receive Additional Shares

If we offer holders of our ordinary shares any rights to subscribe for additional ordinary shares or any other rights, Deutsche Bank
Trust Company Americas may make these rights available to ADR holders. We must first instruct Deutsche Bank Trust Company Americas to do so and furnish it with satisfactory evidence that it is legal
to do so. If we do not furnish this evidence and/or give these instructions, or if Deutsche Bank Trust Company Americas determines in its reasonable discretion that it is not lawful and feasible to
make such rights available to all or certain owners, Deutsche Bank Trust Company Americas may sell the rights and allocate the net proceeds to holders' accounts. Deutsche Bank Trust Company Americas
may allow rights that are not distributed or sold to lapse. In that case, ADR holders will receive no value for them.

If
Deutsche Bank Trust Company Americas makes rights available to ADR holders, upon instruction from such holders it will exercise the rights and purchase the shares on behalf of the ADR
holders.

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Deposit, Withdrawal and Cancellation

ADRs may be turned in at the Corporate Trust Office of Deutsche Bank Trust Company Americas. Upon payment of its fees and expenses and
of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, Deutsche Bank Trust Company Americas will deliver the deposited securities underlying the ADRs at the office of the
custodian, except that Deutsche Bank Trust Company Americas may deliver at its Corporate Trust Office any dividends or distributions with respect to the deposited securities represented by the ADRs,
or any proceeds from the sale of any dividends, distributions or rights, which may be held by Deutsche Bank Trust Company Americas. Alternatively, at the request, risk and expense of the applicable
ADR holder, Deutsche Bank Trust Company Americas will deliver the deposited securities at its Corporate Trust Office.

Voting Rights

ADR holders may instruct Deutsche Bank Trust Company Americas to vote the shares underlying ADRs but only if we ask Deutsche Bank Trust
Company Americas to ask for such instructions. Otherwise, ADR holders will not be able to exercise their right to vote unless such holders withdraw the ordinary shares underlying the ADRs. However, an
ADR holder may not know about a meeting at which such holder may be entitled to vote enough in advance to withdraw the shares.

If
we ask for instructions of an ADR holder, Deutsche Bank Trust Company Americas will notify the ADR holder of the upcoming vote and arrange to deliver voting materials. The materials
will (1) describe the matters to be voted on and (2) explain how ADR holders, on a certain date, may instruct Deutsche Bank Trust Company Americas to vote the shares or other deposited
securities underlying the ADRs as directed. For instructions to be valid, Deutsche Bank Trust Company Americas must receive them on or before the date specified. Deutsche Bank Trust Company Americas
will try, as far as practical, subject to Italian law and the provisions of our articles of association, to vote or to have its agents vote the shares or other deposited securities as instructed by
the ADR holder. Deutsche Bank Trust Company Americas will only vote or attempt to vote as instructed by the ADR holder and will not vote any of such holder's shares or other deposited securities
except in accordance with such instructions.

Deutsche
Bank Trust Company Americas shall fix a record date whenever:



The
purpose of fixing a record date is to determine which ADR holders are:



Material Contracts

The contracts described below have been entered into by Luxottica Group S.p.A. and/or its subsidiaries since April 30, 2009 and, as of the date of
this annual report, contain provisions under which we or one or more of our subsidiaries has an obligation or entitlement which is or may be material to us.

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This
discussion is not complete and should be read in conjunction with the agreements described below, each of which has been filed with the SEC as an exhibit to this annual report.

Contracts Relating to the Company's Indebtedness

For a discussion of our material credit agreements and financings entered into or amended since April 30, 2009, see
"Our Credit FacilitiesThe Euro 250 Million Revolving Credit Facility and Related Interest Rate Swaps," "Our Credit FacilitiesThe
Euro 300 Million Club Deal," "Our Other Debt FinancingsThe U.S. $175 Million Senior Unsecured Guaranteed Notes of U.S. Holdings," "Our Other
Debt FinancingsThe Euro 100 Million Senior Unsecured Guaranteed Notes," and "Our Other Debt FinancingsThe Euro 500 Million Senior
Unsecured Guaranteed Notes" in Item 5"Operating and Financial Review and ProspectsLiquidity and Capital ResourcesOur Indebtedness."

Italian Exchange Controls

The following is a summary of relevant Italian laws in force as of the date of this annual report but does not purport to be a comprehensive description of all
exchange control considerations that may be relevant.

There
are no exchange controls in Italy. Residents and non-residents of Italy may effect any investments, disinvestments and other transactions that entail a transfer of
assets to or from Italy, subject only to the reporting, record-keeping and disclosure requirements described below. In particular, residents of Italy may hold foreign currency and foreign securities
of any kind, within and outside Italy, while non-residents may invest in Italian securities without restriction and may export from Italy cash, instruments of credit or payment and
securities, whether in foreign currency or Euro, representing interest, dividends, other asset distributions and the proceeds of dispositions.

Regulations
concerning updated reporting, record-keeping and restrictions on the use of, among other things, cash and bearer instruments are to be found in Legislative Decree
No. 231 dated November 21, 2007, as amended and supplemented from time to time ("Decree 231/2007"), which implemented in Italy the Anti-Money Laundering Directives
Nos. 2005/60/CE and 2006/70 CE.

Article 49
of the Decree 231/2007 provides that the transfer of cash, bearer bank or postal passbooks and bearer instruments in Euro or foreign currency, effected for any reason
between different parties (resident or non-resident) (a "Transfer"), is forbidden when the total amount is equal to or greater than Euro 5,000. A Transfer is also forbidden when
carried out through multiple paymentseach lower than the Euro 5,000 thresholdthat appear designed to circumvent such prohibition. A Transfer may only be executed
through banks, electronic money institutions and "Poste Italiane S.p.A." (Italian Mail) (collectively, the "Authorized Operators"). Within 30 days of their knowledge, the Authorized
Operators must promptly notify the Ministry of Finance of any breach of the provisions set out in Art. 49 of Decree 231/2007.

In
addition, when the total amount of a Transfer is equal to or greater than Euro 15,000, the Authorized Operators are required to: (i) duly identify the customer and the
beneficial owner (if any) on the basis of documents, data or information deriving from an independent and reliable source; (ii) set up a "Data Processing Archive" ("Archivio Unico Informatico")
which contains a copy of any document required for the customer's and beneficial owner's identification; (iii) notify the Financial Intelligence Unit ("Unità di Informazione
Finanziaria") of the Bank of Italy of any suspicious operation, where possible, before carrying out the Transfer; and (iv) keep record of the information under point (i) above for ten
years following the Transfer. The breach of such provisions under Decree 231/2007 may trigger criminal and administrative sanctions: criminal sanctions are imposed for offenses such as breach of
customer identification obligations and recording duties and breach of the requirement to disclose the fact that a suspicious transaction was reported; administrative sanctions are imposed for
offenses such as failure

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to
set up the Data Processing Archive and to report the suspicious transactions to the Financial Intelligence Unit.

The
Financial Intelligence Unit keeps records of all reports (including those without merit), for ten years and may use them, directly or through other government offices, to police
money laundering, tax evasion and any other crime or violation.

Individuals,
non-profit entities and certain partnerships that are resident in Italy for tax purposes are required to disclose on their annual tax declarations all
investments held outside Italy and foreign financial assets held at the end of a taxable period through which foreign source income taxable in Italy may be derived as well as the total amount of
transfers effected during a taxable period to, from, within and between countries other than Italy relating to such foreign investments or financial assets, even if at the end of the taxable period
such persons no longer owned such foreign investments or financial assets. No such disclosure is required if the total value of the foreign investments and financial assets held at the end of a
taxable period and the total amount of the related transfers effected during the taxable period are not greater than Euro 10,000 in the aggregate. In addition, no such disclosure is required in
respect of securities deposited for management with qualified Italian financial intermediaries and in respect of contracts entered into through their intervention, provided that the items of income
derived from such foreign financial assets are collected through the intervention of the same intermediaries. Corporations and commercial partnerships resident in Italy are exempt from such disclosure
requirements with respect to their annual tax declarations because this information is required to be disclosed in their financial statements.

There
can be no assurance that the present regulatory environment in or outside Italy will continue or that particular policies presently in effect will be maintained, although Italy is
required to maintain certain regulations and policies by virtue of its membership in the European Union and other international organizations and its adherence to various bilateral and multilateral
international agreements.

Taxation

The following summary contains a description of the principal United States federal and Italian income tax consequences of the ownership and disposition of ADSs
or ordinary shares by U.S. holders (as defined below) resident in the United States for tax purposes. The following description does not purport to be a complete analysis of all possible tax
considerations that may be relevant to a U.S. tax resident holder of ADSs or ordinary shares, and U.S. tax resident holders are advised to consult their advisors as to the overall consequences of
their individual circumstances. In particular, this discussion does not address all material tax consequences of owning ordinary shares or ADSs that may apply to special classes of holders, some of
whom may be subject to different rules, including:



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In addition, the following summary does not discuss the tax treatment of ordinary shares or ADSs that are held in connection with a permanent establishment or
fixed base through which a U.S. holder carries on business or performs personal services in Italy.

Furthermore,
certain persons that may not be U.S. holders but who may otherwise be subject to United States federal income tax liability will also be subject to United States federal as
well as Italian tax consequences due to their ownership and disposition of ADSs or ordinary shares. Such investors should consult with their own advisors as to the particular consequences associated
with their investment.

This
discussion is based on the tax laws of Italy and of the United States, including the Code, its legislative history, existing and proposed regulations, and published rulings and
court decisions, as currently in effect, as well as on the currently applicable Convention Between the United States of America and Italy for the Avoidance of Double Taxation with respect to Taxes on
Income and the
Prevention of Fraud or Fiscal Evasion and Protocol Between the United States and Italy (collectively, the "Treaty") and the Convention Between the United States of America and the Italian Republic for
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Estates and Inheritances (the "Estate Tax Convention"). These laws are subject to change, possibly on a
retroactive basis that could affect the tax consequences described below. The Treaty was signed on August 25, 1999, ratified by Italy pursuant to Law 3 March 2009, No. 20, and
entered into force on December 16, 2009, replacing the then-applicable tax treaty and protocol between the United States and Italy (collectively, the "Old Treaty"). The Treaty
includes an anti-abuse provision and a provision limiting treaty benefits to individuals, qualified governmental entities, companies that are publicly traded or that satisfy certain share
ownership requirements, certain pension plans and other tax-exempt entities, and certain other persons meeting prescribed anti-treaty shopping requirements.

The
Treaty also clarifies the availability of treaty benefits to entities that are treated as fiscally transparent under United States or Italian law.

In
addition, this section is based in part upon the representations of the depositary and the assumption that each obligation in the Deposit Agreement and any related agreement will be
performed in accordance with its terms.

This
discussion addresses only Italian income taxation, gift and inheritance taxation and capital gains taxation and United States federal income and estate taxation.

For
purposes of the Old Treaty, the Treaty, the Estate Tax Convention and the Code, U.S. holders of ADSs will be treated as the owners of the underlying ordinary shares represented by
such ADSs. Exchanges of ordinary shares for ADSs and ADSs for ordinary shares generally will not be subject to Italian tax or United States federal income tax.

Italian Tax Law

Withholding or Substitute Tax on Dividends.In general, dividends
paid by
Italian corporations to non-Italian resident beneficial owners without a permanent establishment in Italy to which ordinary shares or ADSs are effectively connected, are subject to final
Italian withholding tax (or substitute tax, in the case of dividends on underlying shares listed on the Milan Stock Exchange) at the rate of 27 percent, unless reduced by an applicable double
taxation treaty or Italian domestic legislation. Reduced rates (normally 15 percent) of withholding tax (or substitute tax) on dividends apply to non-Italian resident beneficial
owners of ordinary shares or ADSs who are entitled to and timely comply with procedures for claiming benefits under an applicable income tax treaty entered into by Italy. Italy has concluded income
tax treaties with over 60 foreign countries, including all European Union member states, Argentina, Australia, Brazil, Canada, Japan, New Zealand, Norway, Switzerland, the United States and
some countries in Africa, the Middle East and East Asia. It should be noted that in general the income tax

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treaties
are not applicable if the beneficial owner is a tax-exempt entity or, with a few exceptions, a partnership or a trust.

Under
the Treaty, Italian withholding tax (or substitute tax) at a reduced rate of 15 percent will generally apply to dividends paid by an Italian corporation to a U.S. resident
entitled to Treaty benefits who timely complies with the procedures for claiming such benefits, provided the dividends are not effectively connected with a permanent establishment in Italy through
which the U.S. resident carries on a business or with a fixed base in Italy through which the U.S. resident performs independent personal services.

The
Italian budget bill for 2008, enacted on December 24, 2007 under Law No. 244, provides for the application of a reduced 1.375 percent withholding tax or substitute tax
on dividends paid by an Italian corporation out of profits accrued from January 1, 2008 (for entities ending their tax year on December 31) to non-resident beneficiary
entities (i) subject to corporate taxation and (ii) resident in an EU Member State or in other states (excluding the United States) which adhere to the "Accordo sullo spazio economico
europeo," which are included in anad hoc"white list" still to be released with a proper decree. Provisional disposals provide that, in the
meantime, reference is to be made to the Decree dated September 4, 1996, which reports the list of countries allowing an adequate exchange of information with the Italian tax authority.

The
currently applicable Italian domestic legislation provides for the application of a reduced 11 percent withholding tax or substitute tax on dividends paid starting from
July 29, 2009 by an Italian corporation to non-Italian resident pension funds established in an EU Member State or in other countries (excluding the United States) which adhere to
the "Accordo sullo Spazio
Economico Europeo," which are included in the above-mentioned "white list" of countries allowing an adequate exchange of information with the Italian tax authority.

Under
Italian law, in general, shares of Italian companies listed on the Milan Stock Exchange have to be registered in the centralized deposit system managed by Monte Titoli.
Dividends paid on shares held in theMonte Titolisystem (including our shares and our
ADSs) to non-Italian beneficial owners without a permanent establishment in Italy to which the shares (or ADSs) are effectively connected are subject to a substitute tax on the same
conditions and at the same rate as the withholding tax mentioned above, but which may be reduced under an applicable double-taxation treaty. This substitute tax will be levied by the Italian
authorized intermediary that participates in theMonte Titolisystem and with which the securities are deposited, as well as by non-Italian
authorized intermediaries participating in theMonte Titolisystem (directly or through a non-Italian centralized deposit system
participating in theMonte Titolisystem), through a fiscal representative to be appointed in Italy.

Since
the ordinary shares of Luxottica Group S.p.A. are registered in the centralized deposit system managed byMonte Titoli, the
substitute tax regime will apply to dividends paid by Luxottica Group S.p.A., instead of the withholding tax regime.

For
a non-Italian resident beneficial owner of the ordinary shares or ADSs to obtain a reduced rate of substitute tax on dividends pursuant to an applicable income tax treaty
entered into by Italy, including the Treaty, the following procedure must be followed. The intermediary with whom the shares are deposited must timely receive:



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The
intermediary must keep the foregoing documentation for the entire period in which the Italian tax authorities are entitled to issue an assessment with respect to the tax year in
which the dividends are paid and, if an assessment is issued, until the assessment is settled. If the intermediary with which the shares are deposited is not resident in Italy, the aforesaid duties
and obligations must be carried out by (i) a bank or an investment services company that is a resident in Italy or (ii) a permanent establishment in Italy of a non-resident
bank or investment services company, appointed by the foreign intermediary as its fiscal representative in Italy.

A
non-Italian resident beneficial owner of ordinary shares or ADSs can obtain application of substitute tax on dividends of Italian source at a reduced rate of
1.375 percent or 11 percent, as applicable, from the intermediary with which the shares are deposited by promptly submittingad hocrequest, together with
proper documentation attesting to the residence and status of the beneficial owner (including a certificate of tax residence from the competent foreign
tax authorities).

As
an alternative to the application of the more favorable treaty rate of substitute tax on dividends or where an income tax treaty does not apply, and except for entities that benefit
from the above-mentioned 1.375 percent or 11 percent substitute tax, under domestic Italian law non-resident stockholders can claim a refund of an amount up to
four-ninths of the 27 percent substitute tax on dividend income from Italian tax authorities provided that (i) they implement anad hocrefund procedure in
accordance with the terms and conditions established by law, and (ii) they provide evidence that this dividend income was subject to income tax in
their country of residence in an amount at least equal to the total refund claimed. Beneficial owners of ordinary shares or ADSs should contact their tax advisors concerning the possible availability
of these refunds, the payment of which is normally subject to extensive delays.

Distributions
of newly issued ordinary shares to beneficial owners with respect to their shares or ADSs that are made as part of a pro rata distribution to all stockholders based on a
gratuitous increase of the share capital through transfer of reserves or other provisions to share capital generally will not be subject to Italian tax. However, distributions of dividends in kind
will be subject to withholding tax.

Tax on Capital Gains.Upon disposal of ordinary shares or ADSs of an Italian resident corporation, capital gains realized by
non-Italian resident individuals and foreign corporations without a permanent establishment in Italy to which the ordinary shares or ADSs are effectively connected may be subject to
taxation in Italy. However, the tax regime depends on whether the interest (ordinary shares, ADSs and/or rights) disposed of is "qualified" or "non-qualified." The disposal of a
"qualified" shareholding in a corporation the stock of which is listed on a regulated market (such as Luxottica Group S.p.A.) is defined to occur when a stockholder (i) owns shares, ADSs
and/or rights through which shares may be acquired representing in the aggregate more than five percent of the share capital or two percent of the shares with voting rights at an ordinary
stockholders' meeting of the corporation and (ii) in any twelve-month period following the date the ownership test under (i) is met, such stockholder engages in the disposal of shares,
ADSs and/or of rights through which shares may be acquired that individually or in the aggregate exceed the percentages indicated under (i) above. Capital gains realized by
non-Italian resident stockholders upon disposal of a "non-qualified" shareholding, are in principle subject in Italy to a capital gain tax ("CGT") at 12.5 percent.
However, an exemption from CGT is provided for gains realized by non-Italian resident stockholders without a permanent establishment in Italy to which the ordinary shares or ADSs are
effectively connected on the disposal of "non-qualified" shareholdings in Italian resident corporations the stock of which is listed on a regulated market (such as Luxottica
Group S.p.A.) even when such shareholdings are held in Italy. Non-Italian residents who dispose of shares or ADSs may be required to timely provide a self-declaration
that they are not resident in Italy for tax purposes, in order to benefit from this exemption, in the case that the "risparmio amministrato" (non-discretionary investment portfolio) or
"risparmio gestito" (discretionary investment portfolio) regime, respectively, provided for by arts. 6 and 7 of Italian Legislative Decree 21 November 1997, No. 461 applies
to them. Upon disposal of a

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"qualified"
shareholding, non-Italian resident stockholders are in principle subject to Italian ordinary taxation on 49.72 percent of the capital gain realized starting from
January 1, 2009.

The
above is subject to any provisions of an applicable income tax treaty entered into by the Republic of Italy, if the income tax treaty provisions are more favorable. The majority of
double tax treaties entered into by Italy, in accordance with the OECD Model tax convention, provide that capital gains realized from the disposition of Italian securities are subject to taxation only
in the country of residence of the seller. Therefore, the capital gains realized by a non-Italian resident entitled to the benefits of a treaty entered into by Italy in accordance with the
OECD Model in respect of taxation of capital gains from the disposition of Italian securities will not be subject to Italian taxation, regardless of whether the shareholding disposed of is qualified
or non-qualified. Non-Italian residents who dispose of shares or ADSs may be required to timely provide appropriate documentation establishing that the conditions of
non-taxability of capital gains realized pursuant to the applicable income tax treaties have been satisfied (including a certificate of tax residence issued by the competent foreign tax
authorities), in the case that the "risparmio amministrato" (non-discretionary investment portfolio) or "risparmio gestito" (discretionary investment portfolio) regime, respectively,
provided for by arts. 6 and 7 of Italian Legislative Decree 21 November 1997, No. 461 applies to them.

Under
the Old Treaty and the Treaty, a person who is considered a U.S. resident for purposes of the Old Treaty and the Treaty and is fully entitled to benefits under the Old Treaty and
the Treaty will not incur Italian capital gains tax on disposal of ordinary shares or ADSs, unless the ordinary shares or ADSs form part of a business property of a permanent establishment of the
holder in Italy or pertain to a fixed base available to a holder in Italy for the purpose of performing independent personal services. In order to benefit from this exemption, U.S. residents who sell
ordinary shares or ADSs may be required to timely produce appropriate documentation establishing that the above-mentioned conditions for non-taxability of capital gains under the Old
Treaty and the Treaty have been satisfied (including a certificate of tax residence issued by the competent U.S. tax authorities).

Inheritance and Gift Tax.Subject to certain exceptions, Italian inheritance and gift tax is generally payable on transfers
of ordinary shares and/or ADSs of an Italian resident corporation by reason of death or donation, regardless of the residence of the deceased or donor and regardless of whether the ordinary shares or
ADSs are held outside Italy.

In
particular, transfers of assets and rights (including ordinary shares and/or ADSs) on death or by gift are generally subject to Italian inheritance and gift
tax:



Inheritance
or gift taxes paid in a jurisdiction outside of Italy relating to the same estate on assets (including ordinary shares and ADSs) existing in that jurisdiction are deductible,
in whole or in part, from the Italian inheritance and gift tax due with respect to the estate.

The
above-described regime may be superseded by the provisions of the double taxation treaties in respect of taxes on estates and inheritances entered into by Italy, if more favorable
and where applicable.

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Subject
to certain limitations, the Estate Tax Convention between the United States and Italy generally affords a credit for inheritance tax imposed by Italy on ordinary shares or ADSs
of an Italian resident corporation that is applicable to any U.S. federal estate tax imposed on the same ordinary shares or ADSs. This credit is available only to the estate of a deceased person who,
at the time of death, was a national of or domiciled in the United States. There is currently no gift tax convention between Italy and the United States.

United States Federal Taxation

For purposes of this section, a U.S. holder is an individual or entity which is a beneficial owner of shares or ADSs and
is:



If
a partnership, or an entity treated for U.S. tax purposes as a partnership, holds ordinary shares or ADSs, the tax treatment of a partner will generally depend upon the status of the
partner and the activities of the partnership. Persons who are partners in partnerships holding ordinary shares or ADSs should consult their tax advisors.

Taxation of Dividends.Under the United States federal income tax laws, a U.S. holder must include as gross income the gross
amount of any dividend paid by Luxottica Group S.p.A. out of its current or accumulated earnings and profits, as determined for United States federal income tax purposes. Such holder must also
include any Italian tax withheld from the dividend payment in this gross amount even though the holder does not in fact receive such amounts withheld. The dividend is ordinary income that must be
included in income when the U.S. holder, in the case of ordinary shares, or the depositary, in the case of ADSs, receives the dividend, actually or constructively. The dividend will not be eligible
for the dividends received deduction generally allowed to United States corporations in respect of dividends received from other United States corporations. The amount of the dividend distribution
that must be included in income for a U.S. holder will be the U.S. dollar value of the Euro payments made, determined at the spot Euro/U.S. dollar rate on the date the dividend distribution is
includible in income, regardless of whether the payment is in fact converted into U.S. dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the
date the U.S. holder includes the dividend payment in income to the date he converts the payment into U.S. dollars will be treated as ordinary income or loss. The gain or loss generally will be income
from sources within the United States for foreign tax credit limitation purposes. Distributions in excess of current and accumulated earnings and profits, as determined for United States federal
income tax purposes, will be treated as a return of capital to the extent of the U.S. holder's basis in the shares or ADSs and thereafter as capital gain.

Subject
to certain generally applicable limitations, the Italian withholding or substitute tax imposed on dividends in accordance with the Old Treaty or the New Treaty and paid over to
Italy will be creditable against a U.S. holder's United States federal income tax liability. To the extent a refund of the tax withheld is available to the U.S. holder under Italian law or under the
Old Treaty or the New Treaty, the amount of tax withheld that is refundable will not be eligible for credit against such holder's United States federal income tax liability. See "Italian
Tax LawWithholding or Substitute Tax on Dividends" for the procedures for obtaining a tax refund.

Dividends
paid by foreign corporations generally constitute income from sources outside the United States, but generally will be "passive income" which is treated separately from other
types of income for

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purposes
of computing the foreign tax credit allowable. The rules governing the foreign tax credit are complex. U.S. holders should consult their tax advisors regarding the availability of a foreign
tax credit for Italian withholding taxes imposed on dividends paid on ordinary shares or ADSs.

Certain
dividends received by non-corporate U.S. holders in taxable years beginning before January 1, 2013 in respect of ordinary shares or ADSs will be taxed at the
rate applicable to long-term capital gains (generally at a maximum income tax rate of 15 percent) if the dividends are "qualified dividends." This reduced income tax rate is only
applicable to dividends paid by U.S. corporations and "qualified foreign corporations" and only with respect to shares held by a qualified U.S. holder (i.e., a non-corporate
stockholder such as an individual) for a minimum holding period (generally, more than 60 days during the 121-day period beginning 60 days before the ex-dividend
date). We believe that we are a "qualified foreign corporation" and that dividends paid by us to individual U.S. holders of ordinary shares or ADSs held for the minimum holding period should thus be
eligible for the reduced income tax rate. See "Passive Foreign Investment Company Considerations" for a discussion of certain restrictions on "qualified foreign corporation" status. Non-corporate U.S.
holders are urged to consult their own tax advisors to determine whether they are subject to any special rules that limit their ability to be
taxed at this favorable rate.

Taxation of Capital Gains.If a U.S. holder sells or otherwise disposes of ordinary shares or ADSs and such shares constitute
a capital asset in the hands of the U.S. holder, such holder will recognize capital gain or loss for United States federal income tax purposes equal to the difference between the U.S. dollar value of
the amount realized and the tax basis, determined in U.S. dollars, in the ordinary shares or ADSs. The deductibility of capital losses is subject to limitations. Capital gain of a
non-corporate U.S. holder, recognized in taxable years which begin before January 1, 2013, is generally taxed at a maximum rate of 15 percent for property held more than one
year. Additionally, gain or loss will generally be from sources within the United States for foreign tax credit limitation purposes.

Passive Foreign Investment Company Considerations.A corporation organized outside the U.S. generally will be classified as a
passive foreign investment company (a "PFIC") for U.S. federal income tax purposes in any taxable year in which either: (a) at least 75 percent of its gross income is "passive income,"
or (b) the average percentage of the gross value of its assets that produce "passive income" or are held for the production of passive income is at least 50 percent. Passive income for
this purpose generally includes dividends, interest, royalties, rents and gains from commodities and securities transactions. Under a special "look-through" rule, in determining whether it
is a PFIC, a foreign corporation is required to take into account a pro rata portion of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25 percent
interest. Where the "look-through" rule applies, there is eliminated from the determination of the status of the foreign corporation as a PFIC stock and debt instruments issued by such a
25 percent-owned subsidiary as well as dividends and interest received from such a 25 percent-owned subsidiary. Based on our audited financial statements, we strongly believe that we are
not a PFIC for U.S. federal income tax purposes for 2010. Based on our audited financial statements and our current expectations regarding the value and nature of our assets and the sources and nature
of our income, we do not expect to become a PFIC for U.S. federal income tax purposes for future years. Nonetheless, given that our PFIC status will be determined by reference to the assets and income
tests applied annually, with the assets test being applied by reference to the average of the fair market value of our assets at the end of each quarter, and the income test being applied by reference
to our income at the end of the taxable year, we cannot provide complete assurance that we will not be a PFIC for either the current taxable year or for any subsequent taxable year. If we are
classified as a PFIC in any year that a U.S. holder is a stockholder, we generally will continue to be treated as a PFIC for that U.S. holder in all succeeding years, regardless of whether we continue
to meet the income or asset test described above. If we are classified as a PFIC in any year, certain materially adverse consequences could result for U.S. holders of ordinary shares or ADSs. Such
adverse consequences could, however, be materially lessened if the U.S. holders timely file either a qualified electing fund or a mark-to-market election. In addition, if we
were classified as a PFIC, in

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a
taxable year in which we pay a dividend or the prior taxable year, we would not be a qualified foreign corporation (as described in "Taxation of Dividends"), and our dividends would not
be eligible for the reduced 15 percent U.S. income tax rate.

Although, as stated above, we strongly believe that we are not, and we do not expect to become, a PFIC, we suggest that all existing and potential U.S. holders
consult their own tax advisors regarding the potential tax impact if we were determined to be a PFIC.

Backup Withholding and Information Reporting.In general, dividend payments or other taxable distributions made within the
United States to a U.S. holder will be subject to information reporting requirements and backup withholding tax (currently at the rate of 28 percent) if such U.S. holder is a
non-corporate United States person and such holder:



A
U.S. holder generally may obtain a refund of any amounts withheld under the backup withholding rules that exceed his, her or its income tax liability by filing a timely refund claim
with the IRS.

After
December 31, 2012, the backup withholding rate will increase to 31 percent under the sunset provisions of currently applicable U.S. tax law.

Persons
who are not United States persons may be required to establish their exemption from information reporting and backup withholding by certifying their status on Internal Revenue
Service Form W-8BEN, W-8ECI or W-8IMY.

The
payment of proceeds from the sale of ordinary shares or ADSs to or through a U.S. office of a broker is also subject to these United States backup withholding and information
reporting rules unless the seller certifies, under penalties of perjury, that such seller is a non-U.S. person (or otherwise establishes an exemption). Special rules apply where ordinary
shares or ADSs are sold through a non-U.S. office of a non-U.S. broker and the sale proceeds are paid outside the United States.

Estate Tax Convention.Under the Estate Tax Convention between the United States and Italy, the ordinary shares or ADSs will
be deemed situated in Italy. Subject to certain limitations, the Estate Tax Convention affords a credit for estate or inheritance tax imposed by Italy on ordinary shares or ADSs that is applicable
against United States federal estate tax imposed on ordinary shares or ADSs. This credit is available only to the estate of a deceased person who, at the time of death, was a national of or domiciled
in the United States.

Documents on Display

We are subject to the informational requirements of the Securities Exchange Act of 1934, applicable to foreign private issuers, and in accordance therewith we
file reports and other information with the SEC. Reports and other information filed by us are available for inspection and copying, upon payment of fees prescribed by the SEC, at the Public Reference
Room maintained by the SEC at 100 F Street, N.E., Washington, DC 20549. Copies of such material are also available for a fee by sending an electronic mail message to the internet group
mailbox publicinfo@sec.gov, by fax at (202) 777-1027 or by mail to 100 F Street, N.E., Washington, DC 20549. Please call the SEC at
1-800-SEC-0330 for more information on the Public Reference Room. In addition, such material may also be inspected and copied at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005. The public may also view our annual reports and other documents filed with the SEC on the Internet at www.sec.gov.

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We furnish Deutsche Bank Trust Company Americas, as depositary with respect to the ADSs, in English, all notices of stockholders' meetings and other reports and
communications that are made generally available to our stockholders. To the extent permitted by law, Deutsche Bank Trust Company Americas makes such notices, reports and communications available to
holders of ADSs in such manner as we request and mails to holders of ADSs a notice containing the information (or a summary thereof in a form provided by us) contained in any notice of a stockholders'
meeting received by Deutsche Bank Trust Company Americas. As a foreign private issuer, we are exempt from the rules under the Securities Exchange Act of 1934 prescribing the furnishing and content of
proxy statements.

ITEM 11.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Sensitivity

At December 31, 2010 and 2009, our interest rate sensitivity was limited to the amount of our unhedged variable rate outstanding debt under our credit
facilities and bank overdraft facilities.

Included
in this amount are:



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The
effect of a ten percent change in interest rates (upward or downward) at December 31, 2010 and 2009, would not have had a material effect on our future annual pretax earnings
and cash flows, based on our expected future pretax earning and cash flows with an interest rate adjustment of ten percent above and below the rates in effect as of December 31, 2010 and 2009.
We calculated this effect both on a single year basis and an accumulated basis using a present value calculation for all variable-rate debt instruments. For U.S. $-denominated activities,
we used an exchange rate of Euro 1.00 = U.S. $1.45 as of both December 31, 2010 and December 31, 2009.

We
monitor our exposure to interest rate fluctuations and may enter into hedging arrangements to mitigate our exposure to increases in interest rates if we believe it is prudent to do
so. We have 45 interest rate derivatives outstanding as of December 31, 2010, as follows:



Foreign Exchange Sensitivity

Our manufacturing subsidiaries are mainly located in Italy and our sales and distribution facilities are maintained worldwide. With the acquisition of Oakley, we
also now have manufacturing facilities in

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the
United States that will be distributing their products worldwide. As such, we are vulnerable to foreign currency exchange rate fluctuations in two principal areas:



Economic Risk.A strengthening of the Euro relative to other
currencies in which we receive revenues
could negatively impact the demand for our products manufactured in Italy and/or reduce our gross margins. However, our Oakley manufacturing facilities in the United States offset the reduced margins
of our Italy-manufactured products, the costs of which are in Euro, as we expand Oakley's sales in Euro-denominated countries. We expect that the weakening of the Euro will have the
reverse effect. In addition, to the extent that our receivables and payables are denominated in different currencies, exchange rate fluctuations could further impact our reported results of
operations. However, our production cycles are relatively short and our receivables and payables are generally short-term in nature. As a result, we do not believe that we currently have
significant exposure in this area. We will, if we believe it is necessary, enter into foreign exchange contracts to hedge certain of these transactions, which could include sales, receivables and/or
payables balances.

IAS 39
requires that all derivatives, whether designated as a hedging relationship or not, be recorded on the balance sheet at fair value regardless of the purpose or intent for
holding them. If a derivative is designated as a fair-value hedge, changes in the fair value of the derivative and the related change in the hedge item are recognized in operations. If a
derivative is designated as a cash-flow hedge, changes in the fair value of the derivative are recorded in other comprehensive income in the consolidated statement of shareholders' equity
and
are recognized in the consolidated statements of income when the hedged item affects operations. For a derivative that does not qualify as a hedge, changes in fair value are recognized in operations.

From
time to time, we use derivative financial instruments, principally currency forward agreements, as part of our risk management policy to reduce our exposure to market risks from
changes in foreign exchange rates. As of December 31, 2010, we had several currency forward derivatives and option structures replicating forward contracts (zero cost collar) with a maturity no
longer than 180 days. We may enter into other foreign exchange derivative financial instruments when we assess that the risk can be hedged effectively.

Translation Risk.A substantial portion of revenues and costs
are denominated in various currencies
other than Euro. The following table provides information about our revenues and costs denominated in various currencies for the years ended December 31, 2010 and 2009, and is not meant to be a
tabular disclosure of market risk:

U.S. Dollars2010

Euro

Other

TotalRevenues


59.1
%

18.3
%

22.6
%

100.0
%Costs and Operating expenses


57.0
%

24.9
%

18.1
%

100.0
%




2009

U.S. Dollars

Euro

Other

TotalRevenues


59.5
%

18.6
%

21.9
%

100.0
%Costs and Operating expenses


58.3
%

25.3
%

16.4
%

100.0
%


Because
a large portion of our revenues and expenses are denominated in U.S. dollars, translation risk resulting from fluctuations in the exchange rate between the U.S. dollar and the
Euro, our reporting

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currency,
could have a material effect on our reported financial position and results of operations. The effect of a ten percent weakening of the U.S. dollar against the Euro as compared to the actual
2010 and 2009 average exchange rate between the U.S. dollar and Euro would have been a decrease in income before taxes of Euro 39.9 million and of Euro 30.1 million,
respectively. In addition, a significant change in the mix of revenues or expenses between or among geographic or operating segments could increase or decrease our exposure to other currency exchange
rate fluctuations. We will continue to monitor our exposure to exchange rate fluctuations and enter into hedging arrangements if and to the extent we believe it to be appropriate.

The
acquisitions of OPSM in 2003, Cole in 2004 and Oakley in 2007 have further increased our exposure to fluctuations in currency exchange rates. The majority of the operations, assets
and liabilities of Cole and Oakley are denominated in U.S. dollars, while, for OPSM and a part of the
Oakley business, the operations, assets and liabilities are mostly denominated in Australian dollars.

ITEM 12.    DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Persons depositing shares in our deposit facility with Deutsche Bank Trust Company Americas are charged a fee for each issuance of
ADSs, including issuances resulting from distributions of shares, share dividends, share splits, bonus and rights distributions and other property, and for each surrender of ADSs in exchange for
deposited shares. Persons depositing shares also may be charged for the following expenses:

1.     Expenses
incurred by the depositary, the custodian or their respective agents in connection with inspections of the relevant share register maintained by the local
registrar and/or performing due diligence on the central securities depository for Italy: an annual fee of U.S. $1.00 per 100 ADSs (such fee to be assessed against holders of record as at the date or
dates set by the depositary as it sees fit and collected at the discretion of the depositary, subject to the Company's prior consent, by billing such holders for such fee or by deducting such fee from
one or more cash dividends or other cash distributions);

2.     Taxes
and other governmental charges incurred by the depositary or the custodian on any ADS or ordinary shares underlying an ADS, including any applicable interest and
penalties thereon, and any share transfer or other taxes and other governmental charges;

3.     Cable,
telex, electronic transmission and delivery expenses;

4.     Transfer
or registration fees for deposited securities on any applicable register in connection with the deposit or withdrawal of deposited securities including those of
a central depository for securities (where applicable);

5.     Expenses
of the depositary in connection with the conversion of foreign currency into U.S. dollars;

6.     Fees
and expenses incurred by the depositary in connection with compliance with exchange control regulations and other regulatory requirements applicable to the shares,
deposited securities and ADSs; and

7.     Any
other fees, charges, costs or expenses that may be incurred by the depositary from time to time.

If
any tax or other governmental charge is payable by the holders and/or beneficial owners of ADSs to the depositary, the depositary, the custodian or the Company may withhold or deduct
from any distributions made in respect of deposited securities and may sell for the account of the holder and/or beneficial owner any or all of the deposited securities and apply such distributions
and sale proceeds in payment of such taxes (including applicable interest and penalties) or charges, with the holder and the beneficial owner thereof remaining fully liable for any deficiency.

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Since
January 1, 2010, we received the following direct and indirect payments from Deutsche Bank Trust Company Americas in the aggregate amount of $95,633 for expenses relating to
the ADR program, including:



PART II

ITEM 13.    DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14.    MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

ITEM 15.    CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports
under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is
accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.
Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of
our principal executive officer and our principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31,
2010. Based upon that evaluation, our principal executive officer and our principal financial officer have concluded that the design and operation of our disclosure controls and procedures provide
reasonable assurance that, as of December 31, 2010, the disclosure controls and procedures are effective.

Management's Report on Internal Control over Financial Reporting

As required by the SEC rules and regulations for the implementation of Section 404 of the Sarbanes-Oxley Act, our management is
responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control over
financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external reporting
purposes in accordance with IFRS.

Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements in our consolidated financial statements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

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Under
the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have conducted an evaluation of the
effectiveness of our internal control over financial reporting based on the framework inInternal ControlIntegrated Frameworkissued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework inInternal ControlIntegrated
Framework, our management has concluded that our internal control over financial reporting was effective as of December 31, 2010.

Our
independent registered public accounting firm has audited and issued its report on the effectiveness of our internal control over financial reporting as of December 31, 2010,
which appears in Item 18 of this annual report on Form 20-F.

Changes in Internal Control over Financial Reporting

During the period covered by this annual report, there were no changes in our internal control over financial reporting that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 16.    [RESERVED]

ITEM 16A.    Audit Committee Financial Expert

Our Board of Directors has determined that a member of our Board of Statutory Auditors, Alberto Giussani, qualifies as an "audit
committee financial expert," as defined in the SEC rules, and is "independent," as defined in such rules. The Board of Statutory Auditors has been designated by our Board of Directors as the
appropriate body to act as our "Audit Committee," as defined in the Sarbanes-Oxley Act, SEC regulations and the NYSE listing standards. See Item 16G"Corporate
GovernanceSummary of the Significant Differences Between Our Corporate Governance Practices and the Corporate Governance Standards of the New York Stock ExchangeBoard
Committees."

ITEM 16B.    Code of Ethics

The Board of Directors adopted a Code of Ethics, as may be amended from time to time, that applies to our chief executive officer,
chief financial officer and all of our directors, members of management bodies, any other employees, and that is addressed to those who directly or indirectly permanently or temporarily have
relationships and dealings with the
Company. We will provide a copy of our Code of Ethics without charge upon a written request sent to our registered office at Via C. Cantù 2, 20123 Milan, Italy. You may also obtain a
copy of our Code of Ethics on our website atwww.luxottica.com.

In
accordance with Italian law, we adopted a Procedure for Handling Privileged Information, updated in March 2008, in order to ensure that material non-public information is
promptly and adequately disclosed to the public and in compliance with the fundamental principles of transparency and truthfulness. We also adopted an Internal Dealing Procedure in order to comply
with certain regulatory amendments. The procedure, updated in March 2008, governs the disclosure obligations and the limitations concerning transactions carried out on shares and other financial
instruments by a "significant" person (including directors, the main stockholders of the company and the persons closely related to them).

ITEM 16C.    Principal Accountant Fees and Services

Deloitte & Touche S.p.A. ("Deloitte & Touche") was engaged as our independent registered public accounting firm to
audit our consolidated financial statements for the years ended December 31, 2010 and 2009. Due to the nature of our operations, numerous Deloitte & Touche entities and affiliates
perform numerous other accounting, tax and consulting tasks for us around the world. The Board of Directors is

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the
corporate body competent to pre-approve, with the favorable opinion of the Board of Statutory Auditors, all audit services for the annual audit of Luxottica Group S.p.A.'s own
financial statements and for the audit of the consolidated financial statements of Luxottica Group S.p.A. and its subsidiaries, and to pre-approve all non-audit services
permissible for all entities in the group, although pre-approval of such services may not always be possible based on the nature of the service. Each pre-approval is typically
given for a one-year period and is detailed by category and budgeted cost.

The
following table sets forth the aggregate fees paid by the Company to Deloitte & Touche for 2010 and 2009:

Thousands of Euro

2010 Fees

2009 FeesAudit fees (including annual financial statement audit, semi-annual reviews and Sarbanes-Oxley audit)


5,238


5,079Audit related fees (including benefit plan audits and acquisition due diligence)


272


148Tax fees (including compliance and planning)


43


36All other fees





63Total fees


5,553


5,326


Our
Board of Statutory Auditors has approved all of the audit and non-audit fees of Deloitte & Touche for the year 2010 in accordance with the pre-approval
policy set forth above. The percentage of audit work performed by persons other than full-time permanent employees of Deloitte & Touche is less than 50 percent.

ITEM 16D.    Exemptions from the Listing Standards for Audit Committees

We rely on the exemption from the listing standards for audit committees set forth in Exchange Act Rule 10A-3(c)(3).
We believe that such reliance will not materially adversely affect the ability of our Board of Statutory Auditors to act independently and to satisfy the other requirements of the SEC rules.

ITEM 16E.    Purchases of Equity Securities by the Issuer and Affiliated Purchasers

During 2010, the Company purchased 3,358,300 ordinary shares on the MTA at an average price of Euro 19.85 per share for an
aggregate amount of Euro 66,650,435.

On
October 29, 2009, our stockholders approved a program authorizing the repurchase and disposal of up to a maximum of 18,500,000 Luxottica Group ordinary shares during the
18 months following such date or, if earlier, the date of approval of the 2010 financial statements, for a maximum cost of up to Euro 370,000,000.

In
parallel with our purchases of shares under that program, our subsidiary, Arnette Optic Illusions, Inc., has sold on the MTA Luxottica ordinary shares that it owns. In 2010,
Arnette sold on the MTA an aggregate of 3,669,962 ordinary shares, at an average price of Euro 20.12, for an aggregate amount of Euro 73,823,196.

The
maximum and minimum price of the share repurchases under both buyback programs is equal to the market price of our ordinary shares on the MTA on the day preceding the relevant
purchase, increased or decreased by 10 percent, respectively. The repurchases of ordinary shares have been and will continue to be carried out in compliance with provisions set forth in
article 2357 of the Italian Civil

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Code
within the limits of retained earnings and available reserves as recorded in our financial statements.

Luxottica Group S.p.A. Purchases of our Ordinary Shares by Month

Total Number of
Ordinary Shares Purchased

Average Price Paid per
Ordinary Share (in Euro)

Total Number of
Ordinary Shares Purchased
as Part of Publicly
Announced Programs

Maximum Number of
Ordinary Shares that
Remain Subject to
Repurchase
(at the End of the
Period)(1)January 1, 2010 to January 31, 2010


262,000


18.58


262,000


16,125,846February 1, 2010 to February 28, 2010





Not applicable





16,125,846March 1, 2010 to March 31, 2010


284,712


19.01


284,712


15,841,134April 1, 2010 to April 30, 2010





Not applicable





15,841,134May 1, 2010 to May 31, 2010


490,000


20.26


490,000


15,351,134June 1, 2010 to June 30, 2010


435,000


20.43


435,000


14,916,134July 1, 2010 to July 31, 2010


460,000


19.49


460,000


14,456,134August 1, 2010 to August 31, 2010


125,000


18.99


125,000


14,331,134September 1, 2010 to September 30, 2010


577,014


19.46


577,014


13,754,120October 1, 2010 to October 31, 2010


150,000


19.69


150,000


13,604,120November 1, 2010 to November 30, 2010


430,000


20.69


430,000


13,174,120December 1, 2010 to December 31, 2010


144,574


21.69


144,574


13,029,546January 1, 2011 to January 31, 2011


285,000


22.67


285,000


12,744,546February 1, 2011 to February 28, 2011


178,680


22.09


178,680


12,565,916


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ITEM 16F.    Change in Registrant's Certifying Accountant

Not applicable.

ITEM 16G.    Corporate Governance

Summary of the Significant Differences Between Our Corporate Governance Practices and the Corporate Governance Standards of the New York Stock Exchange



On November 4, 2003, the New York Stock Exchange (the "NYSE") established new corporate governance rules for listed companies.
Under these NYSE rules, we are permitted, as a listed foreign private issuer, to adhere to the corporate governance standards of our home country in lieu of certain NYSE corporate governance rules, so
long as we disclose the significant ways in which our corporate governance practices differ from those followed by U.S. companies under the NYSE listing standards.

Our
corporate governance practices are governed principally by the Italian Code of Corporate Governance, issued by Borsa Italiana in March 2006 (the "Code of Corporate Governance"), and
generally by the rules and regulations of Commissione Nazionale per le Società e la Borsa, or Consob for Italian companies (collectively, the "Italian Corporate Governance Policies").
Under these Italian Corporate Governance Policies, we are permitted not to comply with certain rules and regulations, as long as we disclose the reason for non-compliance.

The
following is a brief summary of the significant differences between our corporate governance practices in accordance with the Italian Corporate Governance Policies and those followed
by U.S. companies under the NYSE listing standards.



The NYSE listing standards provide that the board of directors of a U.S. listed company must consist of a majority of independent
directors and that certain committees must consist solely of independent directors. A director qualifies as independent only if the board affirmatively determines that the director has no material
relationship with the company, either directly or indirectly. The listing standards enumerate a number of relationships that preclude
independence. In addition, non-management directors of a U.S. listed company are required to meet at regularly scheduled executive sessions without management.

The
Italian Corporate Governance Policies recommend that an "adequate number" of non-executive and independent directors serve on the board of directors of an Italian
company, but do not require the board of directors to consist of a majority of independent directors. Italian law requires that at least one director or, in the event the board of directors is
composed of more than seven members, at least two directors must fulfill the requirements to be independent.

The
standards for determining director independence under the Italian Corporate Governance Policies are substantially similar to the NYSE listing standards for U.S. listed companies. The
Italian Corporate Governance Policies require our non-executive directors to meet at executive sessions without management once per year or else we have to disclose the reason they did not
meet in our Annual Report on Corporate Governance.

Based
on standards under the Italian Corporate Governance Policies, our Board of Directors has determined that, among its 15 members, 7 directors are independent:
Messrs. Abravanel, Cattaneo, Costamagna, Lo Bello, Mangiagalli, Mion and Reboa. This number of independent directors complies with the "adequate number" of non-management directors
recommended by the Italian Corporate Governance Policies. During 2010, our lead independent director, Ivanhoe Lo Bello, convened one meeting of the independent directors.

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The NYSE listing standards require a U.S. listed company to have an audit committee, a nominating/corporate governance committee and a
compensation committee. Each of these committees must consist solely of independent directors and must have a written charter that addresses certain matters specified in the listing standards. The
NYSE listing standards contain detailed requirements for the audit committees of U.S. listed companies. Some, but not all, of these requirements also apply to non-U.S. listed companies
such as us. Italian law, on the other hand, requires neither the establishment of board committees nor the adoption of written committee charters. However, the Italian Corporate Governance Policies do
require the establishment of a Compensation Committee, with certain exceptions, as discussed below.

Italian
law requires companies to appoint a Board of Statutory Auditors. The Board of Directors has designated the Board of Statutory Auditors as the appropriate body to act as the
"Audit Committee," as defined in the Sarbanes-Oxley Act, SEC regulations and the NYSE listing standards. It operates in accordance with Italian law, the Company's By-laws and the
"Regulations Governing the Duties of the Board of Statutory Auditors in accordance with U.S. Audit Committee Requirements." The Board of Statutory Auditors has acted as the Audit Committee since the
annual meeting of stockholders on June 14, 2006. Additional information regarding our Board of Statutory Auditors is set forth below.

With
respect to the nomination of directors, Italian law requires that each Italian listed company file with its registered office, at least 25 days before its ordinary meeting of
stockholders, a list of the personal and professional qualifications of each proposed director nominee. The Company shall make the lists available to the public at least 21 days before the
general meeting. The Italian Corporate Governance Policies also recommend that, if an Italian listed company appoints a committee to select, or recommends the selection by the board of directors of,
director nominees for the next ordinary meeting of stockholders, a majority of this committee be comprised of non-executive directors. The Company has elected not to appoint a committee to
select, or recommend the selection of, director nominees.

The
Italian Corporate Governance Policies require that Italian listed companies appoint a Compensation Committee and that a majority of this committee be comprised of independent
directors, unless the reason for any non-compliance is disclosed. Our Human Resources Committee performs the functions of a compensation committee, including the review of our officers'
compensation and our stock option plans. On April 29, 2009, the Board of Directors of the Company appointed the members of the Human Resources Committee from among non-executive
members of the Board of Directors, three of whom were independent directors, to comply with the provisions of the amended Italian Corporate Governance Policies.

For
more information on the resolution adopted by the Company to comply with the provisions of the Corporate Governance Policies, please see our annual report on corporate governance
available on the Company website atwww.luxottica.com.



The Italian Corporate Governance Policies also require the establishment of an Internal Control Committee. Our Internal Control
Committee consists of four independent directors. The committee has investigative, advisory and proposal-making functions concentrating on, among other matters, the internal control system and the
proper use of accounting principles in conjunction with our administration managers and auditors. The committee reports to the Board of Directors at least twice a year. The members of the Internal
Control Committee, appointed by the Board of Directors on April 29, 2009, are Mario Cattaneo, Chairman,
Marco Mangiagalli, Marco Reboa and, appointed on July 28, 2009, Ivanhoe Lo Bello, each an independent director.

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Our Board of Statutory Auditors consists of three regular members and two alternate members. The Board of Statutory Auditors is
appointed by our stockholders and serves for a period of three years. Italian law establishes the qualifications of candidates that may be appointed as members of the Board of Statutory Auditors. The
office of Member of the Board of Statutory Auditors in a listed company pursuant to Italian law may not be assumed by any individual who holds the same position in five other listed companies. Our
By-laws are required to ensure that at least one member of the Board of Statutory Auditors and one Alternate Auditor may be elected by our minority stockholders. Our By-laws
comply with this requirement by providing that at least one regular member, who shall serve as Chairman of the Board of Statutory Auditors, and one alternate member may be elected by our minority
stockholders in accordance with Italian law.

The
Board of Statutory Auditors oversees our compliance with our By-laws and applicable laws and the adequacy of our internal control system and accounting and administrative
system. The Board of Statutory Auditors is required to attend all meetings of our stockholders and the meetings of our Board of Directors. The Board of Statutory Auditors is also required to notify
Consob if we fail to comply with our By-laws or any applicable laws.



The NYSE listing standards require each U.S. listed company to adopt, and post on its website, a code of business conduct and ethics
for its directors, officers and employees. Under SEC rules, all companies required to submit periodic reports to the SEC, including us, must disclose in their annual reports whether they have adopted
a code of ethics for their chief executive officer and senior financial officers. In addition, they must file a copy of the code with the SEC, post the text of the code on their website or
undertake to provide a copy upon request to any person without charge. There is significant, though not complete, overlap between
the code of business conduct and ethics required by the NYSE listing standards and the code of ethics for the chief financial officer and senior financial officers required by the SEC's rules.

In
accordance with SEC rules we have adopted a Code of Ethics, which contains provisions in compliance with SEC requirements. Our Code of Ethics is available on our website at www.luxottica.com.



The NYSE listing standards require U.S. listed companies to seek stockholder approval for certain equity compensation plans. Italian
law requires Italian listed companies to submit any capital increases of shares reserved for issuance under their equity compensation plans to stockholders for their approval at the meeting of
stockholders. In accordance with Italian law, our stockholders approved capital increases of shares reserved for issuance under our existing stock option plans in 1998, 2001 and 2006. In accordance
with Italian law, our stockholders also approved our 2008 PSP Plan.



The NYSE listing standards require U.S. listed companies to adopt, and post on their websites, a set of corporate governance
guidelines. The guidelines must address, among other things, director qualification standards, director responsibilities, director access to management and independent advisers, director compensation,
director orientation and continuing education, management succession and an annual performance evaluation of the Board of Directors. In addition, the chief executive officer of a U.S. listed company
must certify to the NYSE annually that he or she is not aware of any violations by the company of the NYSE's corporate governance listing standards. The certification must be disclosed in the
company's annual report to stockholders.

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Italian
law requires that listed companies annually report to their stockholders on their corporate governance system. Our Company complies with such requirement. You may find our Annual
Report on Corporate Governance on our website atwww.luxottica.com.



In 2010, the Board of Directors adopted a procedure governing the approval of related party transactions in order to comply with new
Italian regulations. "Related Party Transactions" are transactions in which there is a transfer of resources, services or obligations between "Related Parties" (as defined in the procedure),
regardless of whether consideration has been given.

The
procedure shall not be applied to "Small Amount Transactions," which are transactions in which the foreseeable maximum consideration or value does not exceed
(i) Euro 250,000 per year for remuneration of a member of management or control body or managers in strategic roles or (ii) Euro 2.5 million for other Related Party
Transactions.

The
Board of Directors resolved, as authorized based on, among other things, the interested parties involved in each individual transaction, that: (i) the Human Resources
Committeecomposed of non-executive directors, the majority being independentshall be involved and consulted regarding transactions for the remuneration and
economic benefits of the members of the management and control bodies and managers in strategic roles; and (ii) the Internal Control Committee shall be involved and consulted regarding other
transactions with related parties. Our Related Party Transactions Policy is available on our website atwww.luxottica.com.

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PART III

ITEM 17.    Financial Statements

Not applicable.

ITEM 18.    Financial Statements



Index to Consolidated Financial StatementsReports of Independent Registered Public Accounting Firm


F-1Consolidated Statements of Financial Position for the Years Ended
December 31, 2010 and 2009


F-4Consolidated Statements of Income for the Years Ended December 31, 2010,
2009 and 2008


F-5Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 2010, 2009 and 2008


F-7Consolidated Statements of Cash Flows for the Years Ended December 31,
2010, 2009 and 2008


F-8Notes to Consolidated Financial Statements


F-10Consolidated Financial Statement SchedulesValuation and Qualifying Accounts


F-88


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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
LUXOTTICA GROUP S.p.A.

We
have audited the accompanying consolidated statement of financial position of Luxottica Group S.p.A. (an Italian corporation) and subsidiaries (the "Company") as of December 31, 2010
and 2009, and the related consolidated statements of income, shareholders' equity, comprehensive income and cash flows for each of the three years in the period ended December 31, 2010. Our
audits also included the consolidated financial statement schedule listed in the index at Item 18 of the Company's Annual Report of Form 20-F for the year ended
December 31, 2010. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial
statements and financial statement schedule based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Luxottica Group S.p.A. and subsidiaries as of December 31, 2010 and
2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010, in conformity with International Financial Reporting Standards
as issued by the International Accounting Standards Board. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as
a whole, presents fairly, in all material respects, the information set forth therein.

As
discussed in Note 2 to the consolidated financial statements, effective January 1, 2009 the Company adopted the provisions of the revision of IAS 1, Presentation of Financial
Statementsand applied the new guidance to all periods presented in the accompanying consolidated financial statements. As
discussed in Note 2 to the consolidated financial statements, effective January 1, 2009 the Company changed the accounting method for recognition of actuarial net income and losses
related to defined benefit plans in accordance with IAS 19.

International
Financial Reporting Standards as issued by the International Accounting Standards Board vary in certain significant respects from accounting principles generally accepted in the United
States of America. Information relating to the nature and effect of such differences is presented in Note 34 to the consolidated financial statements.

We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of
December 31, 2010, based on the criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated April 19, 2011 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/
Deloitte & Touche S.p.A.
Milan, Italy
April 19, 2011

F-1

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
LUXOTTICA GROUP S.p.A.

We
have audited the internal control over financial reporting of Luxottica Group S.p.A. (an Italian corporation) and subsidiaries (the "Company") as of December 31, 2010, based on the
criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining
effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying "Management's Report on
Internal Control over Financial Reporting." Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing
such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A
company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing
similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because
of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to
error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are
subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In
our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on the criteria established in Internal
ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

F-2

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We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and consolidated financial statement
schedule as of and for the year ended December 31, 2010 of the Company and our report dated April 19, 2011 expressed an unqualified opinion on those financial statements and financial
statement schedule, and included an explanatory paragraph relating to the Company's adoption of accounting guidance on the adoption of revisions to IAS 1 and IAS 19, both effective
January 1, 2009.

/s/
Deloitte & Touche S.p.A.
Milan, Italy
April 19, 2011

F-3

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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009(*)

(Amounts in thousands of Euro)

Note
reference

2010

2009ASSETSCURRENT ASSETS:Cash and cash equivalents


5


679,852


380,081Accounts receivablenet


6


655,892


618,884Inventoriesnet


7


590,036


524,663Other assets


8


226,759


198,365Total current assets





2,152,539


1,721,993NON-CURRENT ASSETS:Property, plant and equipmentnet


9


1,229,130


1,149,972Goodwill


10


2,890,397


2,688,835Intangible assetsnet


10


1,155,007


1,149,880Investments


11


54,083


46,317Other assets


12


148,125


147,591Deferred tax assets


13


364,299


356,706Total non-current assets





5,841,040


5,539,301TOTAL ASSETS





7,993,579


7,261,294LIABILITIES AND STOCKHOLDERS' EQUITYCURRENT LIABILITIES:Short-term borrowings


14


158,648


148,951Current portion of long-term debt


15


197,566


166,279Accounts payable


16


537,742


434,604Income taxes payable


17


60,067


11,204Other liabilities


18


549,280


554,136Total current liabilities





1,503,303


1,315,174NON-CURRENT LIABILITIES:Long-term debt


19


2,435,071


2,401,796Liability for termination indemnities


20


45,363


44,633Deferred tax liabilities


21


429,848


396,048Other liabilities


22


310,590


350,028Total non-current liabilities





3,220,872


3,192,505STOCKHOLDERS' EQUITYCapital stock


23


27,964


27,863Legal reserve





5,578


5,561Reserves





2,933,175


2,487,406Treasury shares





(112,529
)

(82,713
)Net income





402,187


299,122Luxottica Group stockholders' equity





3,256,375


2,737,239Non-controlling interests


24


13,029


16,376Total stockholders' equity





3,269,404


2,753,615TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY





7,993,579


7,261,294


(*)In
accordance with IFRS.


See notes to the consolidated financial statements.

F-4

---







CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008(*)

(Amounts in thousands of Euro except share data)

Note
reference

2010

2009

2008Net sales


4


5,798,035


5,094,318


5,201,611Cost of sales





(1,990,205
)

(1,762,591
)

(1,748,628
)Gross profit





3,807,831


3,331,727


3,452,983Selling and Advertising





(2,367,979
)

(2,104,362
)

(2,144,989
)General and administrative





(727,693
)

(656,280
)

(576,355
)Total operating expenses





(3,095,672
)

(2,760,642
)

(2,721,344
)Income from operations





712,159


571,085


731,639Other income/(expense)Interest income


25


8,494


6,887


13,265Interest expense


25


(106,987
)

(109,132
)

(123,002
)Othernet


25


(8,130
)

(4,056
)

(33,531
)Income before provision for income taxes





605,535


464,784


588,371Provision for income taxes


25


(218,219
)

(159,888
)

(190,499
)Net income from continuing operations





387,315


304,896


397,872Discontinued operations





19,944





Net Income





407,258


304,896


397,872Of which attributable to:Luxottica Group stockholders





402,187


299,122


390,167Non-controlling interests





5,072


5,774


7,705NET INCOME





407,258


304,896


397,872Weighted average number of shares outstanding:Basic





458,711,441


457,270,491


456,563,502Diluted





460,535,397


457,937,802


457,844,280EPS:Basicfrom continuing operations





0.83


0.65


0.85Basicfrom discontinued operations





0.04


0.00


0.00Basic





0.88


0.65


0.85Dilutedfrom continuing operations





0.83


0.65


0.85Dilutedfrom discontinued operations





0.04


0.00


0.00Diluted





0.87


0.65


0.85


---

See notes to the consolidated financial statements.

F-5

---



CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008(*)

(Amounts in thousands of Euro)

2010

2009

2008Net income


407,258


304,896


397,872Other comprehensive income:Cash flow hedgenet of tax


(3,223
)

10,429


(41,287
)Currency translation differences


233,518


24,827


(63,900
)Actuarial gain/(loss) on defined benefit plansnet of tax


(8,744
)

14,951


(50,208
)Total other comprehensive incomenet of tax


221,552


50,207


(155,395
)Total comprehensive income for the period


628,810


355,103


242,477Attributable to:Luxottica Group stockholders' equity


622,949


349,889


235,115Non-controlling interests


5,861


5,214


7,362Total comprehensive income for the period


628,810


355,103


242,477


See notes to the consolidated financial statements.

F-6

---





Table of Contents



CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008(*)

Capital stockAdditional
paid-in
capital



Stock
options
reserve

Translation
of foreign
operations
and other





Non-
controlling
interests(Amounts in thousands of Euro)

Number
of shares

Amount

Legal
reserve

Retained
earnings

Treasury
shares

Stockholders'
equityBalance as of January 1, 2008


462,623,620


27,757


5,536


130,712


2,601,514


123,761


(366,990
)

(69,987
)

2,452,303


17,608Net Income














390,167











390,167


7,705Other Comprehensive Income:Translation Difference




















(63,557
)




(63,557
)

(343
)Cash Flow Hedgenet of taxes of Euro 20.4 million














(41,287
)










(41,287
)

Actuarial gains/(losses)net of taxes of Euro 32.3 million














(50,208
)










(50,208
)

Total Comprehensive Income as of December 31, 2008














298,672





(63,557
)




235,115


7,362Exercise of Stock Options


744,613


45





7,081














7,126


Non-cash Stock-based compensation

















(25,803
)







(25,803
)

Excess tax benefit on Stock options











631














631


Change in non-controlling interests in subsidiary





























(3,364
)Dividends (Euro 0.49 per share)














(223,617
)










(223,617
)

(7,877
)Allocation of Legal Reserve








18





(18
)













Balance as of December 31, 2008


463,368,233


27,802


5,554


138,424


2,676,551


97,958


(430,547
)

(69,987
)

2,445,755


13,729Net Income














299,122











299,122


5,774Other Comprehensive Income:Translation Difference




















25,387





25,387


(560
)Cash Flow Hedgenet of taxes of Euro 4.2 million














10,429











10,429


Actuarial gains/(losses)net of taxes of Euro 8.1 million














14,951











14,951


Total Comprehensive Income as of December 31, 2009














324,502





25,387





349,889


5,214Exercise of Stock Options


1,018,150


61





11,437














11,498


Non-cash Stock-based compensationnet of taxes of Euro 1.7 million

















26,605








26,605


Excess tax benefit on Stock options











1,156














1,156Investments in treasury shares











15,895











(12,726
)

3,169


Dividends (Euro 0.22 per share)














(100,833
)










(100,833
)

(2,567
)Allocation of Legal Reserve








7





(7
)













Balance as of December 31, 2009


464,386,383


27,863


5,561


166,912


2,900,213


124,563


(405,160
)

(82,713
)

2,737,239


16,376Net Income














402,187











402,187


5,072Other Comprehensive Income:Translation Difference




















232,729





232,729


789Cash Flow Hedgenet of taxes of Euro 0.3 million














(3,223
)










(3,223
)

Actuarial gains/(losses)net of taxes of Euro 4.6 million














(8,744
)










(8,744
)

Total Comprehensive Income as of December 31, 2010














390,220





232,729





622,949


5,861Exercise of Stock options


1,690,827


101





22,316














22,417


Non-cash Stock-based compensationnet of taxes of Euro 1.7 million

















34,621








34,621


Excess tax benefit on Stock options











2,084














2,084


Investments in treasury shares net of taxes of Euro 16.5 million











27,511











(29,816
)

(2,305
)

Dividends (Euro 0.35 per share)














(160,630
)










(160,630
)

(9,208
)Allocation of Legal Reserve








17





(17
)













Balance as of December 31, 2010


466,077,210


27,964


5,578


218,823


3,129,786


159,184


(172,431
)

(112,529
)

3,256,375


13,029


See notes to the consolidated financial statements.

F-7

---



Table of Contents



CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008(*)

(Amounts in thousands of Euro)

2010

2009

2008Net income


407,259


304,897


397,872Stock-based compensation


32,940


24,936


(21,461
)Depreciation and amortization


322,062


285,445


264,548Net loss on disposals of fixed assets and other


4,990


11,231


12,874Other non-cash items(**)


4,524


13,806


17,581Changes in accounts receivable


(1,606
)

25,659


27,875Changes in inventories


(36,544
)

46,703


4,352Changes in accounts payable


86,667


27,488


(33,051
)Changes in other assets/liabilities


(21,114
)

180,004


(103,960
)Changes in income taxes payable


32,455


(16,681
)

2,904Total adjustments


424,374


598,591


171,662Cash provided by operating activities


831,633


903,488


569,534Property, plant and equipment:Additions


(230,358
)

(200,409
)

(296,436
)DisposalsPurchases of businessesnet of cash acquired(***)


(121,761
)

(7,518
)

(13,363
)Sales of businessesnet of cash disposed


5,520





6,880Investments in equity investees


(20,684
)

(21,323
)

Additions to intangible assets





(19
)

(1,797
)Cash used in investing activities


(367,283
)

(229,269
)

(304,716
)


See notes to the consolidated financial statements.

F-8

---



Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008(*)

(Amounts in thousands of Euro)

2010

2009

2008Long-term debt:Proceeds


881,705


987,738


995,709Repayments


(930,362
)

(1,214,976
)

(1,005,453
)Increase (decrease) in short-term lines of credit


14,185


(57,418
)

32,591Exercise of stock options


22,416


11,498


7,126Sale of treasury shares


14,195


3,169


Dividends


(169,839
)

(103,484
)

(231,493
)Cash used in financing activities


(167,700
)

(373,473
)

(201,520
)Increase in cash and cash equivalents


296,650


300,746


63,298Cash and cash equivalents, beginning of the period


346,624


28,426


(20,492
)Effect of exchange rate changes on cash and cash equivalents


21,684


17,452


(14,381
)Cash and cash equivalents, end of the period


664,958


346,624


28,426


Supplemental disclosure of cash flows information:

(Amounts in thousands of Euro)

2010

2009

2008Cash paid during the period for interest


115,010


94,095


121,181Cash paid during the period for income taxes


186,045


70,839


266,104


The following is a reconciliation between the balance of cash and cash equivalents according to the consolidated statement of cash flows and the
balance of cash and cash equivalents according to the consolidated statement of financial position:

(Amounts in thousands of Euro)

2010

2009

2008Cash and cash equivalents according to the consolidated statement of cash flows (net of bank overdrafts)


664,958


346,624


28,426Bank overdrafts


14,894


33,457


260,024Cash and cash equivalents according to the consolidated statement of financial position


679,852


380,081


288,450


See notes to the consolidated financial statements.

F-9

---





Luxottica Group S.p.A.Registered office at Via C. Cantù 220123 Milan Share capital
€ 27,964,632.60Authorized and issued



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS
As of DECEMBER 31, 2010

GENERAL INFORMATION

Luxottica Group S.p.A. (henceforth, the "Company") is a corporation with a registered office in Milan (Italy) at Via C. Cantù 2.

The
Company and its subsidiaries (collectively, the "Group") operate in two industry segments: (1) manufacturing and wholesale distribution; and (2) retail distribution.

Through
its manufacturing and wholesale distribution operations, the Group is engaged in the design, manufacturing, wholesale distribution and marketing of house brand and designer lines
of mid to premium-priced prescription frames and sunglasses, as well as of performance optics products.

Through
its retail operations, as of December 31, 2010, the Company owned and operated 5,824 retail locations worldwide and franchised an additional 526 locations principally
through its subsidiaries Luxottica Retail North America Inc., Sunglass Hut Trading, LLC, OPSM Group Pty Limited and Oakley, Inc. ("Oakley").

The
retail division's fiscal year is a 52- or 53-week period ending on the Saturday nearest December 31. The accompanying consolidated financial statements
include the operations of the North America retail division for the 52-week periods for fiscal years 2010 and 2009, and for the 53-week period for fiscal year 2008. The fiscal years for
the retail
distribution divisions in Asia-Pacific and South Africa included 52-week periods for 2010 and 2008, and a 53-week period for 2009.

The
Company is controlled by Delfin S.à r.l., a company subject to Luxembourg law.

These
consolidated financial statements were authorized to be issued by the Board of Directors of the Company in its meeting on February 28, 2011.

Beginning
with fiscal year 2010 and for all future reporting periods, the Group reports its financial results in accordance with the International Financial Reporting Standards as issued
by the International Accounting Standards Board in all financial communications, including reports to the United States Securities and Exchange Commission (the "SEC"). Up to and including the 2009
fiscal year, the Group reported its financial results in accordance with generally accepted accounting principles in the United States ("U.S. GAAP").

Since
2005, the Group has also been preparing consolidated financial statements in Italy in accordance with IFRS as required by Italian law. In accordance with paragraph 6345.2 of the
Division of Corporate Finance Financial Reporting Manual, a reconciliation from U.S. GAAP to IFRS for the 2009 consolidated statements of financial position and 2009 consolidated statements of income
is included in note 34 of these notes.

BASIS OF PREPARATION

The consolidated financial statements as of December 31, 2010 have been prepared in accordance with the International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board ("IASB") as of the date of approval of these consolidated financial statements by the Board of Directors of the Company.

F-10

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

IFRS
are all the international accounting standards ("IAS") and all the interpretations of the International Financial Reporting Interpretations Committee ("IFRIC").

The
principles and standards utilized in preparing these consolidated financial statements have been consistently applied through all periods presented.

These
consolidated financial statements are composed of a consolidated statement of income, a consolidated statement of comprehensive income, a consolidated statement of financial
position, a consolidated statement of cash flows, a consolidated statement of changes in stockholders' equity and related notes to the consolidated financial statements.

The
presentation of certain prior year information has been reclassified to conform to the current presentation. In particular, the Group reclassified Euro 8,604 thousand
from selling expenses to general and administrative expenses in the consolidated statement of income.

The
Company's reporting currency for the presentation of the consolidated financial statements is the Euro. Unless otherwise specified, the figures in the statements and within these
notes to the consolidated financial statements are expressed in thousands of Euro.

The
Company presents its consolidated statement of income using the function of expense method. The Company presents current and non-current assets and current and
non-current liabilities as separate classifications in its consolidated statements of financial position. This presentation of the consolidated statement of income and of the consolidated
statement of financial position is believed to provide the most relevant information. The consolidated statement of cash flows was prepared and presented utilizing the indirect method.

The
financial statements were prepared using the historical cost convention, with the exception of certain financial assets and liabilities for which measurement at fair value is
required.

The
consolidated financial statements have been prepared on a going concern basis. Management believes that there are no material uncertainties that may cast significant doubt upon the
Group's ability to continue as a going concern.

1.  CONSOLIDATION PRINCIPLES, CONSOLIDATION AREA AND SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION PRINCIPLES

Subsidiaries

Subsidiaries are any entities over which the Group has the power to govern the financial and operating policies (as defined by
IAS 27Consolidated and Separate Financial Statements), generally with an ownership of more than one half of the voting rights. The
existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The
Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is measured as the fair value
of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and

F-11

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

1.  CONSOLIDATION PRINCIPLES, CONSOLIDATION AREA AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

liabilities
and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition
basis, the Group recognizes any non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's net
assets.

The
excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in
the acquiree over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired
in the case of a bargain purchase, the difference is recognized directly in the consolidated statement of income.

In
business combinations achieved in stages, the Group remeasures its previously held equity interest in the acquiree at its acquisition date fair value and recognizes the resulting gain
or loss, if any, in profit and loss.

Inter-company
transactions, balances and unrealized gains and losses on transactions between Group companies are eliminated. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Group.

The
individual financial statements used in the preparation of the consolidated financial statements are prepared and approved by the administrative bodies of the individual companies.

Transactions with non-controlling interests

Transactions with noncontrolling interests are treated as transactions with equity owners of the Group. For purchases from
non-controlling interests, the difference between any consideration paid and the relevant share acquired of the
carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

When
the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognized in
profit or loss.

Associates

Associates are any entities over which the Group has significant influence but not control, generally with ownership of between 20
percent and 50 percent of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognized at cost.

The
Group's share of its associates' post-acquisition profits or losses is recognized in the consolidated statement of income, and its share of post-acquisition
movements in other comprehensive income is recognized in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment.
When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has
incurred obligations or made payments on behalf of the associate.

Unrealized
gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in the associates. Unrealized losses are also eliminated unless
the transaction

F-12

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

1.  CONSOLIDATION PRINCIPLES, CONSOLIDATION AREA AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

provides
evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

Dilution
gains and losses arising in investments in associates are recognized in the consolidated statement of income.

Other companies

Investments in entities in which the Group does not have either control or significant influence, generally with ownership of less than
20 percent, are originally recorded at cost and subsequently measured at fair value.

Translation of the financial statements of foreign companies

The Group records transactions denominated in foreign currency in accordance with IAS 21The
effect of changes in Foreign Exchange Rates.

The
results and financial position of all the Group entities (none of which have the currency of a hyper-inflationary economy) that have a functional currency different from the
presentation currency are translated into the presentation currency as follows:

(a)   assets
and liabilities for each consolidated statement of financial position presented are translated at the closing rate at the date of that consolidated statement of
financial position;

(b)   income
and expenses for each consolidated statement of income are translated at average exchange rates (unless this average is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

(c)   all
resulting exchange differences are recognized in other comprehensive income.

Goodwill
and fair value adjustments arising from the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

CONSOLIDATION AREA

During 2010, there were no significant changes to the consolidation area. Please refer to note 10 "Goodwill and other intangible assetsnet"
and note 11 "Investments" for the main changes in the consolidation area.

SIGNIFICANT ACCOUNTING POLICIES

Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Substantially all amounts in transit from the banks are converted to cash within four
business days from the time of sale. Investments qualify as cash equivalents only when they have a maturity of three months or less from the date of the acquisition.

F-13

---





Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

1.  CONSOLIDATION PRINCIPLES, CONSOLIDATION AREA AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Accounts receivable and other receivables

Accounts receivable and other receivables are carried at amortized cost. Losses on receivables are measured as the difference between
the receivables' carrying amount and the present value of estimated future cash flows discounted at the receivables' original effective interest rate computed at the time of initial recognition. The
carrying amount of the receivables is reduced through an allowance for doubtful accounts. The amount of the losses on
written-off accounts is recorded in the consolidated statement of income within selling expenses.

Subsequent
collections of previously written-off receivables are recorded in the consolidated statement of income as a reduction of selling expenses.

Inventories

Inventories are stated at the lower of the costdetermined by using the method of the average annual cost by product
lineand the net realizable value. Provisions for write-downs for raw materials and finished goods which are considered obsolete or slow moving are computed taking into account their
expected future utilization and their realizable value. The realizable value represents the estimated sales price, net of estimated sales and distribution costs.

Property, plant and equipment

Property, plant and equipment are measured at their historical cost. Historical cost includes expenditures that are directly
attributable to the acquisition of the items. After initial recognition, an item of property, plant and equipment is carried at cost less accumulated depreciation and any accumulated impairment loss.
The depreciable amount of the items of property, plant and equipment, measured as the difference between their cost and their residual value, is allocated on a straight-line basis over
their estimated useful lives as follows:

Buildings and buildings improvements

From 19 to 40 yearsMachinery and equipment

From 3 to 12 yearsAircraft

25 yearsOther equipment

From 5 to 8 yearsLeasehold Improvements

The lower of 15 years and the residual duration of the lease
contract


Depreciation
ends on the date on which the asset is classified as held for sale, in compliance with IFRS 5Non-Current Assets Held
for Sale and Discontinued Operations.

Subsequent
costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the
item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is

F-14

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

1.  CONSOLIDATION PRINCIPLES, CONSOLIDATION AREA AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

derecognized.
All other repairs and maintenance costs are charged to the consolidated statement of income during the financial period in which they are incurred.

Borrowing
costs that are directly attributable to the acquisition, construction or production of a qualifying item of property, plant and equipment are capitalized as part of the cost of
that asset.

Upon
disposal or when no future economic benefits are expected from the use of an item of property, plant and equipment, its carrying amount is derecognized. The gain or loss arising
from derecognition is included in profit and loss.

Assets held for sale

Assets held for sale include non-current assets (or disposal groups) whose carrying amount will be primarily recovered
through a sale transaction rather than through continuing use and whose sale is highly probable in the short term. Assets held for sale are measured at the lower of their carrying amount and their
fair value, less costs to sell.

Finance and Operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the consolidated statement of income on a straight-line basis over the lease
term.

Leases
where lessees bear substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the lease's commencement at the lower
of the fair value of the leased property and the present value of the minimum lease payments.

Each
lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance charges, are included in "long-term debt" in
the statement of financial position. The interest element of the finance cost is charged to the consolidated statement of income over the lease period. The assets acquired under finance leases are
depreciated over the shorter of the useful life of the asset and the lease term.

Intangible assets

(a)Goodwill

Goodwill
represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary at the date of
acquisition. Goodwill is tested at least annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the
disposal of an entity include the carrying amount of goodwill relating to the entity sold.

(b)Trademarks and other intangible assets

Separately
acquired trademarks and licenses are shown at historical cost. Trademarks, licenses and other intangible assets, including distribution networks and franchisee agreements,
acquired in a

F-15

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

1.  CONSOLIDATION PRINCIPLES, CONSOLIDATION AREA AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

business
combination are recognized at fair value at the acquisition date. Trademarks and licenses have a finite useful life and are carried at cost less accumulated amortization and accumulated
impairment losses. Amortization is calculated using the straight-line method to allocate the cost of trademarks and licenses over their estimated useful lives.

Contractual
customer relationships acquired in a business combination are recognized at fair value at the acquisition date. The contractual customer relations have a finite useful life
and are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized over the expected life of the customer relationship.

All
intangible assets are subject to impairment tests, as required by IAS 36Impairment of Assets, if there are
indications that the assets may be impaired.

Impairment of assets

Intangible assets with an indefinite useful lifefor example, goodwillare not subject to amortization and are
tested at least annually for impairment.

Intangible
assets with a definite useful life are subject to amortization and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair
value less costs to sell and value in use. For the purposes of assessing impairment, intangible assets are grouped at the lowest levels for which there are separately identifiable cash flows
(cash-generating units). Intangible assets other than goodwill are reviewed at each reporting date to assess whether there is an indication that an impairment loss recognized in prior
periods may no longer exist or has decreased. If such an indication exists, the loss is reversed and the carrying amount of the asset is increased to its recoverable amount, which may not exceed the
carrying amount that would have been determined if no impairment loss had been recorded. The reversal of an impairment loss is recorded in the consolidated statement of income.

Financial assets

The financial assets of the Group fall into the following categories:

a.Financial assets at fair value through profit and loss

Financial
assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of
selling in the short term. Derivatives are also categorized as held for trading unless they are designated as hedges. Assets in this category are classified as current assets. In this case, the
subsequent fair value changes are recorded based on specific criteria. For further information, refer to the paragraph, "Derivative financial instruments".

The
assets in this category are classified as current assets and recorded at their fair value at the time of their initial recognition. Transaction costs are immediately recognized in
the consolidated statement of income.

F-16

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Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

1.  CONSOLIDATION PRINCIPLES, CONSOLIDATION AREA AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

After
initial recognition, financial assets at fair value through profit and loss are measured at their fair value in each reporting period. Gains and losses deriving from changes in
fair value are recorded in the consolidated statement of income in the period in which they occur. Dividend income from financial assets at fair value through profit or loss is recognized in the
consolidated statement of income as part of other income when the Group's right to receive payments is established.

b.Loans and receivables

Loans
and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets,
except for those with maturities greater than 12 months or which are not expected to be repaid within 12 months after the end of the reporting period. These are classified as
non-current assets. The Group's loans and receivables are comprised of trade and other receivables. Loans and receivables are initially measured at their fair value plus transaction costs.
After initial recognition, loans and receivables are measured at amortized cost, using the effective interest method.

c.Financial assets available for sale

Available-for-sale
financial assets are non-derivative financial assets that are either designated in this category or not classified in any of the
other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period.
Financial assets available for sale are initially measured at their fair value plus transaction costs. After initial recognition, financial assets available for sale are carried at fair value. Any
changes in fair value are recognized in other comprehensive income. Dividend income from financial assets held for sale is recognized in the consolidated statement of income as part of other income
when the Group's right to receive payments is established.

A
regular way purchase or sale of financial assets is recognized using the settlement date.

Financial
assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks
and rewards of ownership.

The
fair value of listed financial instruments is based on the quoted price on an active market. If the market for a financial asset is not active (or if it refers to
non-listed securities), the Group defines the fair value by utilizing valuation techniques. These techniques include using recent arms-length market transactions between
knowledgeable willing parties, if available, reference to the current fair value of another instrument that is substantially the same, discounted cash flows analysis, and pricing models based on
observable market inputs, which are consistent with the instruments under valuation.

The
valuation techniques are primarily based on observable market data as opposed to internal sources of information.

At
each reporting date, the Group assesses whether there is objective evidence that a financial asset is impaired. In the case of investments classified as financial assets held for
sale, a prolonged or significant decline in the fair value of the investment below its cost is also considered an indicator that the asset is impaired. If any such evidence exists for an
available-for-sale financial asset, the cumulative loss, measured as the difference between the cost of acquisition and the current fair value, net any impairment

F-17

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Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

1.  CONSOLIDATION PRINCIPLES, CONSOLIDATION AREA AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

loss
previously recognized in the consolidated statement of income, is removed from equity and recognized in the consolidated statement of income.

Any
impairment loss recognized on investment classified as available-for-sale financial asset is not reversed.

Derivative financial instruments

Derivative financial instruments are accounted for in accordance with IAS 39Financial
Instruments: Recognition and Measurement.

At
the date the derivative contract is entered into, derivative instruments are accounted for at their fair value and, if they are not designated as hedging instruments, any changes in
fair value after initial recognition are recognized as components of net income for the year. If, on the other hand, derivative instruments meet the requirements for being classified as hedging
instruments, any subsequent changes in fair value are recognized according to the following criteria, as illustrated below.

The
Group designates certain derivatives as instruments for hedging specific risks associated with highly probable transactions (cash flow hedges).

For
each derivative financial instrument designated as a hedging instrument, the Group documents the relationship between the hedging instrument and the hedged item, as well as the risk
management objectives, the hedging strategy and the methodology to measure the hedging effectiveness. The hedging effectiveness of the instruments is assessed both at the hedge inception date and on
an ongoing basis. A hedging instrument is considered highly effective when both at the inception date and during the life of the instrument, any changes in fair value of the derivative instrument
offset the changes in fair value or cash flows attributable to the hedged items.

If
the derivative instruments are eligible for hedge accounting, the following accounting criteria are applicable:



F-18

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Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

1.  CONSOLIDATION PRINCIPLES, CONSOLIDATION AREA AND SIGNIFICANT ACCOUNTING POLICIES (Continued)



Accounts payable and other payables

Accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less from the reporting date. If not, they are presented as non-current liabilities.

Accounts
payable are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.

Long-term debt

Long-term debt is initially recorded at fair value, less directly attributable transaction costs, and subsequently measured
at its amortized cost by applying the effective interest method. If there is a change in expected cash flows, the carrying amount of the long-term debt is recalculated by computing the
present value of estimated future cash flows at the financial instrument's original effective interest rate. Long-term debt is classified under non-current liabilities when the
Group retains the unconditional right to defer the payment for at least 12 months after the balance sheet date under current liabilities when payment is due within 12 months from the
balance sheet date.

Long-term
debt is removed from the statement of financial position when it is extinguished, i.e. when the obligation specified in the contract is discharged, canceled
or expires.

Current and deferred taxes

The tax expense for the period comprises current and deferred tax.

Tax
expense is recognized in the consolidated statement of income, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this
case, the tax is also recognized in other comprehensive income or directly in equity, respectively. The current income tax charge is calculated on the basis of the tax laws enacted or substantially
enacted at the balance sheet date in the countries where the Group operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in
which applicable tax

F-19

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Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

1.  CONSOLIDATION PRINCIPLES, CONSOLIDATION AREA AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

regulation
is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred
income tax is recognized on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred income tax is not accounted for if it arises from initial recognition of an asset
or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax
rates (and laws) that have been enacted or substantially enacted as of the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income
tax liability is settled. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be
utilized. Deferred income tax is recognized on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liabilities where the timing of the reversal
of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets and liabilities are
offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by
the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Employee benefits

The Group has both defined benefit and defined contribution plans.

A
defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further
contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

A
defined benefit plan is a pension plan that is not a defined contribution plan. Typically, defined benefit plans define an amount of pension benefit that an employee will receive upon
retirement, usually dependent on one or more factors such as age, years of service and compensation. The liability recognized in the consolidated statement of financial position in respect of defined
benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets, together with adjustments for unrecognized
past-service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit
obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits
will be paid and that have terms to maturity approximating the terms of the related pension obligation.

F-20

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Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

1. CONSOLIDATION PRINCIPLES, CONSOLIDATION AREA AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Actuarial
gains and losses due to changes in actuarial assumptions or to changes in the plan's conditions are recognized as incurred in the consolidated statement of comprehensive
income.

For
defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has
no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expenses when they are due. Prepaid contributions are recognized as an asset
to the extent that a cash refund or a reduction in the future payments is available.

Provisions for risks

Provisions for risks are recognized when:



Provisions
are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognized as interest expense.

Share-based payments

The Company operates a number of equity-settled, share-based compensation plans, under which the entity receives services from
employees as consideration for equity instruments (options). The fair value of the employee services received in exchange for the grant of the options is recognized as an expense. The total amount to
be expensed is determined by reference to the fair value of the options granted.

The
total expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period,
the Company revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognizes the impact of the revision to original
estimates, if any, in the consolidated statement of income, with a corresponding adjustment to equity.

Recognition of revenues

Revenue is recognized in accordance with IAS 18Revenue. Revenues
include sales of merchandise (both wholesale and retail), insurance and administrative fees associated with the Group's managed vision care business, eye exams and related professional services, and
sales of merchandise to franchisees along with other revenues from franchisees such as royalties based on sales and initial franchise fee revenues.

Wholesale
Division revenues are recognized from sales of products at the time of shipment, as title and the risks and rewards of ownership of the goods are assumed by the customer at
such time. The

F-21

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Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

1. CONSOLIDATION PRINCIPLES, CONSOLIDATION AREA AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

products
are not subject to formal customer acceptance provisions. In some countries, the customer has the right to return products for a limited period of time after the sale. However, such right of
return does not impact the timing of revenue recognition. Accordingly, the Group records an accrual for the estimated amounts to be returned. This estimate is based on the Group's right of return
policies and practices along with historical data and sales trends. There are no other post-shipment obligations. Revenues received for the shipping and handling of goods are included in
sales and the costs associated with shipments to customers are included in operating expenses.

Retail
Division revenues are recognized upon receipt by the customer at the retail location or, for internet and catalogue sales, when goods are shipped to the customer. In some
countries, the Group allows retail customers to return goods for a period of time and, as such, the Group records an accrual for the estimated amounts to be returned. This accrual is based on the
historical return rate as a percentage of net sales and the timing of the returns from the original transaction date. There are no other post-shipment obligations. Additionally, the Retail
Division enters into discount programs and similar relationships with third parties that have terms of twelve or more months. Revenues under these arrangements are recognized upon receipt of the
products or services by the customer at the retail location. For internet and catalogue sales, advance payments and deposits from customers are not recorded as revenues until the product is delivered.
The Retail Division also includes managed vision care revenues consisting of both fixed fee and fee-for-service managed vision care plans. For fixed fee plans, the plan sponsor
pays the Group a monthly premium for each enrolled subscriber. Premium revenue is recognized as earned during the benefit coverage period. Premiums are generally billed in the month of benefit
coverage. Any unearned premium revenue is deferred and recorded within accrued liabilities on the consolidated statement of financial position. For
fee-for-service plans, the plan sponsor pays the Company a fee to process its claims. Revenue is recognized as the services are rendered. This revenue is presented as third
party administrative services revenue. For these programs, the plan sponsor is responsible for funding the cost of claims. Accruals are established for amounts due under these relationships estimated
to be uncollectible.

Franchise
revenues based on sales by franchisees (such as royalties) are accrued and recognized as earned. Initial franchise fees are recorded as revenue when all material services or
conditions relating to the sale of the franchise have been substantially performed or satisfied by the Group and when the related store begins operations. Allowances are established for amounts due
under these relationships when they are determined to be uncollectible.

The
Group licenses to third parties the rights to certain intellectual property and other proprietary information and recognizes royalty revenues when earned.

The
Wholesale and Retail Divisions may offer certain promotions during the year. Free frames given to customers as part of a promotional offer are recorded in cost of sales at the time
they are delivered to the customer. Discounts and coupons tendered by customers are recorded as a reduction of revenue at the date of sale.

Use of estimates

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and
assumptions which influence the value of assets and liabilities as well as

F-22

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Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

1. CONSOLIDATION PRINCIPLES, CONSOLIDATION AREA AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

revenues
and costs reported in the consolidated statement of financial position and in the consolidated statement of income, respectively, or the disclosures included in the notes to the consolidated
financial statements, in relation to potential assets and liabilities existing as of the date the consolidated financial statements were authorized for issue.

Estimates
are based on historical experience and other factors. The resulting accounting estimates could differ from the related actual results. Estimates are periodically reviewed and
the effects of each change are reflected in the consolidated statement of income in the period in which the change occurs.

The
current economic and financial crisis has resulted in the need to make assumptions on future trends that are characterized by a significant degree of uncertainty and, therefore, the
actual results in future years may significantly differ from the estimate.

The
most significant accounting principles which require a higher degree of judgment from management are illustrated below.

a)    Valuation
of receivables. Receivables from customers are adjusted by the related allowance for doubtful accounts in order to take into account their recoverable amount.
The determination of the amount of write-downs requires judgment from management based on available documentation and information, as well as the solvency of the customer, and based on past experience
and historical trends;

b)    Valuation
of inventories. Inventories which are obsolete and slow moving are periodically evaluated and written down in the case that their recoverable amount is lower
than their carrying amount. Write-downs are calculated on the basis of management assumptions and estimates which are derived from experience and historical results;

c)     Valuation
of deferred tax assets. The valuation of deferred tax assets is based on forecasted results which depend upon factors that could vary over time and could have
significant effects on the valuation of deferred tax assets;

d)    Income
taxes. The Group is subject to different tax jurisdictions. The determination of tax liabilities for the Group requires the use of assumptions with respect to
transactions whose fiscal consequences are not yet certain at the end of the reporting period. The Group recognizes liabilities which could result from future inspections by the fiscal authorities on
the basis of an estimate of the amounts expected to be paid to the taxation authorities. If the result of the abovementioned inspections differs from that estimated by the Group management, there
could be significant effects on both current and deferred taxes;

e)    Valuation
of goodwill. Goodwill is subject to an annual impairment test. This calculation requires management's judgment based on information available within the Group
and the market, as well as on past experience; and

f)      Benefit
plans. The Group participates in benefit plans in various countries. The present value of pension liabilities is determined using actuarial techniques and certain
assumptions. These assumptions include the discount rate, the expected return on plan assets, the rates of future compensation increases and rates relative to mortality and resignations. Any change in
the abovementioned assumptions could result in significant effects on the employee benefit liabilities.

F-23

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Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

1. CONSOLIDATION PRINCIPLES, CONSOLIDATION AREA AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Earnings per share

The Company determines earnings per share and earnings per diluted share in accordance with
IAS 33Earnings per Share. Basic earnings per share are calculated by dividing profit or loss attributable to ordinary equity holders
of the parent entity by the weighted average number of shares outstanding during the period. For the purpose of calculating the diluted earnings per share, the Company adjusts the profit and loss
attributable to ordinary equity holders, and the weighted average number of shares outstanding, for the effect of all dilutive potential ordinary shares.

Treasury Shares

Treasury shares are recorded as a reduction of Stockholders' equity. The original cost of treasury shares, as well as gains or losses
on the purchase, sale or cancellation of treasury shares, are not recorded in the consolidated statement of income.

2. NEW ACCOUNTING PRINCIPLES

Certain new principles, amendments and interpretations are effective for reporting periods beginning on or after January 1, 2010.

Amendments and interpretations of existing principles which are effective for reporting periods beginning on January 1, 2010.

IFRS 3 (revised)Business combinations:The new standard continues
to apply the purchase accounting method to business combinations, introducing certain significant changes. For example, acquisition-related costs (i.e. attorneys, advisors, auditors and
professionals in general)are accounted for as expenses in the period in which they are incurred and services are received. There is a choice on an acquisition-by-acquisition basis to
measure any non controlling interest in the acquiree either at fair value (full goodwill) or at the non-controlling interest's proportionate share of the acquiree's identifiable net
assets. In a case where the acquirer obtains control of an acquiree in which it held an equity interest immediately before the acquisition date (step acquisitions), the acquirer remeasures its
previously held equity interest in the acquiree at its acquisition date fair value and recognizes the resulting gain or loss in the consolidated statement of income. The consideration transferred is
measured at fair value while any contingent considerationi.e. the obligation of the acquirer to transfer additional assets or equity interests to the former owners of an acquiree
if a specified future event occurs or specific conditions are metare recognized at their acquisition date fair value and classified as a financial liability. Changes in fair value of
contingent consideration are generally recorded in the consolidated statement of income. The application of IFRS 3 (revised) did not have a significant impact on the Company's financial
statements in the current period, but is expected to have an effect in future periods depending on the nature, terms and size of future acquisitions.

IAS 27
(revised)Consolidated and separate financial statements: IAS 27 (revised) requires the effects of all
transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The
standard also specifies the accounting treatment when control is lost. Any remaining interest is re-measured to fair

F-24

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Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

2. NEW ACCOUNTING PRINCIPLES (Continued)

value,
and a gain or loss is recognized in profit or loss. IAS 27 (revised) did not have a significant impact on the Company's financial statements in the current period.

Amendment
to IFRS 2Share-based payment: group cash-settled share-based payment transactions:The amendment
clarifies that the company receiving goods or services as part of share-based payment plans should recognize such goods or services regardless of which group or company settles the transaction and
regardless of whether the transaction is settled in cash or shares. The amendment also specifies that a company should measure goods or services received as part of a transaction settled in cash or
shares from its perspective, which might not coincide with that of the group or with the relevant amount recognized in the consolidated financial statements. The amendment did not have any impact on
the Company's consolidated financial statements in the current period.

IFRS 8Operating Segments: This amendment requires that an entity disclose the total amount of assets for each
reporting segment only if such amount is regularly reported to the highest authority in its decision-making process. This disclosure was previously required even if such condition was not met. Based
on the amendment, the Group no longer discloses the total amount of assets for each reporting segment.

IAS 36Impairment of Assets:This amendment requires that each unit or group of units to which goodwill is allocated
for impairment testing purposes should not be larger than an operating segment determined in accordance with paragraph 5 of IFRS 8, before any combination permitted by the same standard.
The amendment had no impact on the Company's consolidated financial statements in the current period.

Amendments and interpretations of existing principles which are effective for reporting periods beginning on January 1, 2010 but not currently relevant for the Group
(although they may affect the accounting for future transactions and events).

IFRIC 17Distributions of Non-cash Assets to Owners: The
interpretation clarifies that a dividend payable should be recognized when the dividend is properly authorized and that an entity should measure the dividend payable at the fair
value of the net assets to be distributed. Finally, an entity should recognize the difference between the dividend paid and the carrying amount of the net assets used for payment in the consolidated
statement of income.

IFRIC 18Transfers of Assets from Customers:The interpretation clarifies the accounting treatment to be followed for
agreements in which an entity receives from a customer an item of property, plant and equipment that the entity must then use either to connect the customer to a network or to provide the customer
with ongoing access to a supply of goods or services (such as a supply of electricity, gas or water).

IAS 39Financial Instruments: Recognition and Measurement: This amendment restricts the scope exemption in
paragraph 2(g) of IAS 39 to forward contracts between an acquirer and a vendor in a business combination to buy or sell an acquiree at a future date. The term of the forward contract
should not exceed the period of time necessary to obtain all the authorizations to complete the transaction. The amendment clarifies that the exemption in paragraph 2(g) of IAS 39 does
not apply to options which, if exercised, would result in the acquisition of control of an entity. The amendment also clarifies that loan repayment penalties, which offset the lender's loss of
additional interest, should be treated in close relation to the loan contract and, accordingly, should not be recognized separately. Lastly, the

F-25

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Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

2. NEW ACCOUNTING PRINCIPLES (Continued)

amendment
clarifies that gains or losses on hedging instruments should be reclassified from equity to profit or loss in the period in which the hedged cash flows affect profit or loss. IAS 39
was also amended to clarify how existing principles to determine whether a hedged risk or portion of cash flows is eligible for designation should be applied in particular situations.

IFRIC 9Reassessment of Embedded Derivatives: This amendment excludes derivatives from the scope of application of
IFRIC 9 if they are embedded in contracts acquired through business combinations when jointly-controlled entities or joint ventures are formed.

IFRS 2Share-based Payment: This amendment clarifies that IFRS 2 does not apply to transactions in which a
company acquires assets as part of (i) a business combination, as defined by IFRS 3 (revised), (ii) the contribution of a business unit to form a joint venture or
(iii) the combination of businesses or business units in jointly-controlled entities.

IFRS 5Non-current Assets Held for Sale and Discontinued Operations:This amendment clarifies that
IFRS 5, as well as the other IFRS standards that make specific reference to non-current assets (or disposal groups) classified as held for sale or discontinued operations, set forth
all required disclosures for these types of assets or operations. The standard was also amended to require an entity that is committed to a sale plan involving loss of control of a subsidiary to
classify all the assets and liabilities of that subsidiary as held for sale,
regardless of whether the entity retains a non-controlling interest in its former subsidiary after the sale.

IAS 1Presentation of Financial Statements: This amendment updates the previous definition of current liabilities under
IAS 1. The previous definition required the classification of liabilities as current if they could be settled at any time through the issuance of equity instruments. Following the change, the
option of converting a liability into an equity instrument is irrelevant for the purposes of its classification as current/non-current.

IAS 7Statement of Cash Flows: This amendment clarifies that only those cash flows that lead to the creation of an
asset can be classified as arising from investing activities in the statement of cash flows.

IAS 17Leasing: This amendment extends the general conditions of IAS 17, which allow for the classification of a
lease asfinanceoroperatingregardless of whether ownership is acquired at the end of the
lease, to
land under lease as well. Previously, under IAS 17, land leases in which ownership was not acquired at the end of the lease were classified as operating leases. At the adoption date, all land
under current leases that have not yet expired should be measured separately, with the retroactive recognition of a new lease accounted for as a finance lease, where applicable.

IAS 18Revenue:This revision specifies the criteria to consider when determining whether, within a transaction that
generates revenue, an entity is principal or agent. The identification of an entity as principal or agent determines how revenue is recognized. If it acts as agent, revenue may be recognized solely
from commissions.

IAS 38Intangible Assets: The amendment clarifies guidance in measuring the fair value of an intangible asset acquired
in a business combination and permits the grouping of intangible assets as a single asset if each asset has similar useful economic lives.

IFRIC 16Hedges of a net investment in a foreign operation:The amendment states that, in a hedge of a net investment
in a foreign operation, qualifying hedging instruments may be held by any entity or entities within a group, including the foreign operation itself, as long as the designation, documentation

F-26

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Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

2. NEW ACCOUNTING PRINCIPLES (Continued)

and
effectiveness requirements of IAS 39 that relate to a net investment hedge are satisfied. In particular, a group should clearly document its hedging strategy because of the possibility of
different designations at different levels of a group.

Amendments and interpretations of existing principles which are effective for reporting periods beginning after January 1, 2010 and not early adopted.

IFRS 9Financial instruments, issued in November 2009. This standard
is the first step in the process to replace IAS 39Financial instruments: recognition and measurement. IFRS 9 introduces new
requirements for classifying and measuring financial assets. The new standard reduces the number of categories of financial assets pursuant to IAS 39 and requires that all financial assets be:
(i) classified on the basis of the model which the company has adopted in order to manage its financial activities and on the basis of the cash flows from financing activities;
(ii) initially measured at fair value plus any transaction costs in the case of financial assets not measured at fair value through profit and loss; and (iii) subsequently measured at
their fair value or at the amortized cost. IFRS 9 also provides that embedded derivatives which fall within the scope of IFRS 9 must no longer be separated from the primary contract
which contains them and states that the company may decide to directly record within the consolidated statement of comprehensive income any changes in the fair value of investments which fall within
the scope of IFRS 9. The standard is not applicable until January 1, 2013 but is available for early adoption. The Group has not early adopted and has not yet assessed IFRS 9's
full impact.

IAS 24
(revised)Related party disclosures, issued in November 2009. It supersedes IAS 24, Related party
disclosures, issued in 2003. IAS 24 (revised) is mandatory for periods beginning on or after January 1, 2011. Earlier
application, in whole or in part, is permitted. The revised standard clarifies and simplifies the definition of a related party and removes the requirement for government-related entities to disclose
details of all transactions with the government and other government-related entities.

IAS 32
amendmentClassification of rights issuesissued in October 2009. The amendment applies to annual periods
beginning on or after February 1, 2010. Earlier application is permitted. The amendment addresses the accounting for rights issues that are denominated in a currency other than the functional
currency of the issuer. Provided certain conditions are met, such rights issues are now classified as equity regardless of the currency in which the exercise price is denominated. The amendment
applies retrospectively in accordance with IAS 8Accounting policies, changes in accounting estimates and errors.

IFRIC 19Extinguishing financial liabilities with equity instruments, issued in November 2009, is effective from
July 1, 2010. The interpretation clarifies the accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a creditor
of the entity to extinguish all or part of the financial liability. It requires a gain or loss to be recognized in profit or loss, which is measured as the difference between the carrying amount of
the financial liability and the fair value of the equity instruments issued. If the fair value of the equity instruments issued cannot be reliably measured, the equity instruments should be measured
to reflect the fair value of the financial liability extinguished.

IFRIC 14
amendmentsPrepayments of a minimum funding requirement,issued in November 2009. The amendments correct an
unintended consequence of IFRIC 14, IAS 19The limit on a defined benefit asset, minimum funding requirements and their
interactions. Without the amendments, entities are not permitted to recognize as an asset certain voluntary prepayments for minimum funding

F-27

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

2. NEW ACCOUNTING PRINCIPLES (Continued)

contributions.
The amendments are effective for annual periods beginning January 1, 2011. Earlier application is permitted.

In
May 2010 the IASB issued a series of amendments to IFRS (Improvements to IFRSs). Details are provided in the following paragraphs for those identified by the IASB as resulting in
accounting changes for presentation, recognition and measurement purposes, excluding any amendments regarding changes in terminology or editorial changes.



F-28

---







Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

2. NEW ACCOUNTING PRINCIPLES (Continued)

Changes to previously applied accounting principles

During 2009, the Group changed the accounting principle on to the recognition of actuarial gains and losses on defined benefit plans. Actuarial gains and losses
comprise (i) the effects of differences between the previous actuarial assumptions and what has actually occurred and (ii), the effect of changes in actuarial assumptions. Up to
December 31, 2008, actuarial gains and losses were recognized based on the "corridor" method. Starting from January 1, 2009, the Company recognizes actuarial gains and losses in other
comprehensive income, as incurred.

The
above change was implemented in order to reduce volatility and improve comparability of the consolidated statements of income presented.

In
accordance with IAS 8, the change in the accounting principle was applied retrospectively. The effects of the change on stockholders' equity, deferred tax assets, termination
indemnities and other long-term payables, as of January 1, 2008 and January 1, 2009, are reported below (amounts in thousands of Euro):

January 1, 2008Reported

Effect due to
change in
accounting
principle

RestatedRetained earnings


2,604,274


(2,760
)

2,601,514Currency translation difference


(367,421
)

431


(366,990
)Liability for termination indemnities


48,344


(3,034
)

45,310Other non-current liabilities


232,185


7,942


240,127Deferred tax assets


314,026


4,831


318,857Deferred tax liabilities


372,350


2,252


374,602




January 1, 2009Reported

Effect due to
change in
accounting
principle

RestatedRetained earnings


2,729,519


(52,968
)

2,676,551Currency translation difference


(428,093
)

(2,454
)

(430,547
)Liability for termination indemnities


47,355


(1,789
)

45,566Other non-current liabilities


326,681


92,602


419,283Deferred tax assets


355,470


35,883


391,353Deferred tax liabilities


415,778


492


416,270


In
September 2007, the IASB issued a revised IAS 1Presentation of Financial Statementsrequiring to present, in a
statement of changes in equity, all owner changes in equity. All non-owner changes in equity (i.e. comprehensive income) are required to be presented in one statement of
comprehensive income or in two separate statements (an income statement and a statement of comprehensive income). Components of comprehensive income are not permitted to be presented in the statement
of changes in equity. The Company has applied the revised standard retrospectively from January 1, 2009, electing to present both the

F-29

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

2. NEW ACCOUNTING PRINCIPLES (Continued)

income
statement and the statement of comprehensive income, and has consequently amended the presentation of changes in stockholders' equity. The provisions of the new guidance have been applied to
all periods presented in the accompanying consolidated financial statements.

3. FINANCIAL RISKS

The assets of the Group are exposed to different types of financial risk: market risk (which includes exchange rate risks, interest rate risk relative to fair value variability and cash
flow uncertainty), credit risk and liquidity risk. The risk management strategy of the Group aims to stabilize the results of the Group by minimizing the potential effects due to volatility in
financial markets. The Group uses derivative financial instruments, principally interest rate and currency swap agreements, as part of its risk management strategy.

Financial
risk management is centralized within the Treasury department which identifies, evaluates and implements financial risk hedging activities, in compliance with the Financial
Risk Management Policy guidelines approved by the Board of Directors, and in accordance with the Group operational units. The Policy defines the guidelines for any kind of risk, such as the exchange
rate
risk, the interest rate risk, credit risk and the utilization of derivative and non-derivative instruments. The Policy also specifies the management activities, the permitted instruments,
the limits and proxies for responsibilities.

a)Exchange rate risk

The
Group operates at the international level and is therefore exposed to exchange rate risk related to the various currencies with which the Group operates. The Group only manages
transaction risk. The transaction exchange rate risk derives from commercial and financial transactions in currencies other than the functional currency of the Group, i.e. the Euro.

The
primary exchange rate to which the Group is exposed is the Euro/USD exchange rate.

The
exchange rate risk management policy defined by the Group's management states that transaction exchange rate risk must be hedged for a percentage between 50 percent and 100 percent
by trading forward currency contracts or permitted option structures with third parties.

This
exchange rate risk management policy is applied to all subsidiaries, including companies which have been recently acquired.

If
the Euro/USD exchange rate had changed by +/- 10 percent, with all other variables constant, the decrease/increase in net income and equity would be equal to, net of tax
effect, Euro 6.7 million as of December 31, 2010 (Euro 2.1 million as of December 31, 2009) and Euro 8.3 million as of December 31, 2010
(Euro 1.8 million as of December 31, 2009), respectively.

Even
if exchange rate derivative contracts are stipulated to hedge future commercial transactions as well as assets and liabilities previously recorded in the financial statements in
foreign currency, these contracts, for accounting purposes, are not accounted for as hedging instruments.

b)Price risk

The
Group is generally exposed to price risk associated with investments in bond securities which are classified as assets at fair value through profit and loss. As of
December 31, 2010 and 2009, the

F-30

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

3. FINANCIAL RISKS (Continued)

Group
investment portfolio was fully divested. As a result, there was no exposure to price risk on such dates. The investment portfolio, in accordance with contractual obligations, must not exceed a
value at risk (VAR) of 2 percent with a confidence level of 99 percent. The Group will periodically monitor the VAR level.

c)Credit risk

Credit
risk exists related to accounts receivable, cash, financial instruments and deposits in banks and other financial institutions.

c1)  The
credit risk related to commercial counterparties is locally managed and monitored by a centralized credit group for all the entities included in the wholesale
distribution segment. Credit risk which originates within the Retail Segment (including franchise and managed vision care) is locally managed by the companies included in the Retail segment.

Losses
on receivables are recorded in the financial statements if there are indicators that a specific risk exists or as soon as risks of potential insolvency arise, by determining an
adequate accrual for doubtful accounts.

The
allowance for doubtful accountsutilized for the Wholesale segment, and in accordance with the credit policy of the Groupis determined by rating customers
according to the following categories:





The
Group does not have significant concentrations of credit risk. In any case, there are proper procedures in place to ensure that the sales of products and services are made to
reliable customers on the basis of their financial position as well as past experience and other factors. Credit limits are defined according to internal and external evaluations that are based on
thresholds approved by the Board of Directors.

The
Group's commercial exposure is regularly monitored through automated control instruments.

Moreover,
the Group has entered into an agreement with the insurance company Euler Hermes Siac in order to cover the credit risk associated with customers of Luxottica Extra Ltd.
in those countries where the Group is not present.

F-31

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

3. FINANCIAL RISKS (Continued)

c2)  With
regards to credit risk related to the management of financial resources and cash availabilities, the risk is managed and monitored by the Group Treasury Department
through financial guidelines to ensure that all the Group subsidiaries maintain relations with primary bank counterparties. Credit limits with respect to the primary financial counterparties are based
on evaluations and analyses that are implemented by the Group Treasury Department.

Within
the Group there are various shared guidelines governing the relations with the bank counterparties, and all the companies of the Group comply with the "Financial Risk Policy"
directives.

Usually,
the bank counterparties are selected by the Group Treasury Department, and cash availabilities can be deposited, over a certain limit, only with counterparties with elevated
credit ratings, as defined in the policy.

Operations
with derivatives are limited to counterparties with solid and proven experience in the trading and execution of derivatives and with elevated credit ratings, as defined in the
policy, in addition to being subordinate to the undersigning of an ISDA Master Agreement. In particular, counterparty risk of derivatives is mitigated through the diversification of the counterparty
banks with which the Group deals. In this way, the exposure with respect to each bank is never greater than 25 percent of the total amount of the derivatives portfolio of the Group.

During
the course of the year, there were no situations in which credit limits were exceeded. Based on the information available to the Group, there were no potential losses deriving
from the inability of the abovementioned counterparties to meet their contractual obligations.

d)Liquidity risk

The
management of the liquidity risk which originates from the normal operations of the Group involves the maintenance of an adequate level of cash availabilities as well as financial
availabilities through an adequate amount of committed credit lines.

With
regard to the policies and actions that are used to mitigate liquidity risks, the Group takes adequate actions in order to meet its obligations. In particular, the
Group:



F-32

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

3. FINANCIAL RISKS (Continued)

The
following tables include a summary, by maturity date, of assets and liabilities at December 31, 2010 and December 31, 2009. The reported balances are contractual and
undiscounted figures. With regard to forward foreign currency contracts, the tables relating to assets report the flows related to only receivables. These amounts will be counterbalanced by the
payables, as reported in the tables relating to liabilities. With regard to interest rate swaps, the cash flows include the settlement of the interest spread, both positive and negative, which expire
during different periods. The various maturity date categories represent the period of time between the date of the financial statements and the contractual maturity date of the obligations, whether
receivable or payable.

(Amounts in thousands of Euro)

Less than
1 year

From 1 to
3 years

From 3 to
5 years

Beyond
5 yearsAs of December 31, 2010Cash and cash equivalents


679,852Derivatives receivable


2,183Accounts receivable


655,892Other current assets


63,327




(Amounts in thousands of Euro)

Less than
1 year

From 1 to
3 years

From 3 to
5 years

Beyond
5 yearsAs of December 31, 2009Cash and cash equivalents


380,081Derivatives receivable


733





262Accounts receivable


618,884Other current assets


73,956




(Amounts in thousands of Euro)

Less than
1 year

From 1 to
3 years

From 3 to
5 years

Beyond
5 yearsAs of December 31, 2010Debt owed to banks and other financial institutions


428,385


1,321,627


959,664


374,975Derivatives payable


44,951


20,505Accounts payable


537,742Other current liabilities


440,590




(Amounts in thousands of Euro)

Less than
1 year

From 1 to
3 years

From 3 to
5 years

Beyond
5 yearsAs of December 31, 2009Debt owed to banks and other financial institutions


882,229


1,112,841


676,271


207,798Derivatives payable


38,729


19,423Accounts payable


434,604Other current liabilities


461,709


F-33

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

3. FINANCIAL RISKS (Continued)

e)Interest rate risk

The
interest rate risk to which the Group is exposed primarily originates from long-term debt. Such debt accrues interest at both fixed and floating rates.

With
regard to the risk arising from fixed-rate debt, the Group does not apply specific hedging policies since it does not deem the risk to be material.

Floating-rate
debt exposes the Group to a risk from the volatility of the interest rates (cash flow risk). In relation to this risk, and for the purposes of the related
hedging, the Group utilizes derivate contracts, specifically Interest Rate Swap (IRS) agreements, which exchange the floating rate for a fixed rate, thereby reducing the risk from interest rate
volatility.

The
risk policy of the Group requires the maintenance of a percentage of fixed-rate debts that is greater than 25 percent and less than 75 percent of total
debts. This percentage is obtained by utilizing Interest Rate Swap agreements, where required.

On
the basis of various scenarios, the Group calculates the impact of rate changes on the consolidated statement of income. For each scenario, the same interest rate change is utilized
for all currencies. The various scenarios only include those liabilities at floating rates that are not hedged with fixed interest rate swaps. On the basis of these scenarios, the impact, as of
December 31, 2010 and net of tax effect, of an increase/decrease of 100 basis points on net income, in a situation with all other variables unchanged, would have been a maximum decrease of
Euro 4.4 million (Euro 9.4 million as of December 31, 2009) or a maximum increase of Euro 4.4 million (Euro 9.4 million as of
December 31, 2009).

With
reference to Interest Rate Swap agreements utilized to hedge against cash flow risk, as of December 31, 2010, and in the event that interest rates increased/decreased by 100
basis points, with all other variables unchanged, the stockholders' equity reserves would have been respectively greater by Euro 12.7 million (Euro 20.7 million as of
December 31, 2009), net of tax effect, and lower by Euro 12.9 million (Euro 21.3 million as of December 31, 2009), net of tax effect, in connection with the
increase/decrease of the fair value of the derivatives used for the cash flow hedges.

Plus 100 basis points

Minus 100 basis pointsAs of December 31, 2010(Amounts in millions of Euro)

Net income

Reserve

Net income

ReserveLiabilities


(4.4
)




4.4Hedging derivatives (Cash Flow Hedges)





12.7





(12.9
)




Plus 100 basis points

Minus 100 basis pointsAs of December 31, 2009(Amounts in millions of Euro)

Net income

Reserve

Net income

ReserveLiabilities


(9.4
)




9.4Hedging derivatives (Cash Flow Hedges)





20.7





(21.3
)


F-34

---





Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

3. FINANCIAL RISKS (Continued)

For
the purposes of fully disclosing information about financial risks, a reconciliation between classes of financial assets and liabilities and the types of financial assets and
liabilities identified on the basis of IFRS 7 requirements is reported below (in thousands of Euro):

Financial
assets
at fair
value through
profit and loss

Accounts
receivable

Investments
held until
maturity

Financial
assets
available
for sale

Financial
liabilities at
fair value
through
profit and loss

Other liabilities

Hedging derivatives

Total

Note(*)December 31, 2010Cash and cash equivalents





679,852

















679,852


5Accounts receivable





655,892

















655,892


6Other current assets


1,484


61,843

















63,327


8Other non-current assets





34,240

















34,240


12Short-term borrowings

















158,648





158,648


14Current portion of long-term debt

















197,566





197,566


15Accounts payable

















537,742





537,742


16Other current liabilities














4,689


435,000


901


440,590


18Long-term debt

















2,435,071





2,435,071


19Other non-current liabilities

















61,694


52,964


114,658


22




Financial
assets at
fair value
through
profit and loss

Accounts
receivable

Investments
held until
maturity

Financial
assets
available
for sale

Financial
liabilities at
fair value
through
profit and loss

Other
liabilities

Hedging
derivatives

Total

Note(*)December 31, 2009Cash and cash equivalents





380,081

















380,081


5Accounts receivable





618,884

















618,884


6Other current assets


1,028


72,928

















73,956


8Other non-current assets





18,026

















18,026


12Short-term borrowings

















148,951





148,951


14Current portion of long-term debt

















166,279





166,279


15Accounts payable

















434,604





434,604


16Other current liabilities














3,629


458,004


76


461,709


18Long-term debt

















2,401,796





2,401,796


19Other non-current liabilities

















88,819


48,642


137,461


22


The
financing agreements of the Group (See note 19) require compliance with negative pledges and financial covenants, as set forth in the respective agreements, with the exception
of our Bond issue dated November 15, 2015, which requires compliance only with negative pledges.

With
regards to negative pledges, in general, the clauses prohibit the Company and its subsidiaries from permitting any liens or security interests on any of their assets in favor of
third parties and without the consent of the lenders over a threshold equal to 30 percent of the Group consolidated stockholders' equity. In addition, the sale of assets of the Company and its
subsidiaries is limited to a maximum threshold of 30 percent of consolidated assets. Default with respect to the abovementioned clauses

F-35

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

3. FINANCIAL RISKS (Continued)

and
following a grace period during which the default can be remediedwould be considered a material breach of the contractual obligations pursuant to the financing agreements of the
Group.

Financial
covenants require the Group to comply with specific levels of financial ratios. The most significant covenants establish a threshold for the ratio of net debt of the Group to
EBITDA
(Earnings before interest, taxes, depreciation and amortization) as well as EBITDA to financial charges. The covenants are reported in the following table:

Net financial position/Pro forma EBITDA

<3.5 xEBITDA/Pro forma financial charges

>5.0 x


In
the case of a failure to comply with the abovementioned ratios, the Group may be called upon to pay the outstanding debt if it does not correct such default within a period of 15
business days from the date of reporting such default.

Compliance
with these covenants is monitored by the Group at the end of each quarter and, as of December 31, 2010, the Group was fully in compliance with these covenants. The
Group also analyzes the trend of these covenants in order to monitor its compliance and, as of today, the analysis indicates that the ratios of the Group are below the thresholds which would result in
default.

In
order to determine the fair value of financial instruments, the Group utilizes valuation techniques which are based on observable market prices (Mark to Model). These techniques
therefore fall within Level 2 of the hierarchy of Fair Values identified by IFRS 7. In order to select the appropriate valuation techniques to utilize, the Group complies with the
following hierarchy:

The
Group determined the fair value of the derivatives existing on December 31, 2010 through valuation techniques which are commonly used for instruments similar to those traded
by the Group. The models applied to value the instruments are based on a calculation obtained from the Bloomberg information service. The input data used in these models are based on observable market
prices (the Euro and USD interest rate curves as well as official exchange rates on the date of valuation) obtained from Bloomberg.

As
of January 1, 2009, the Group had adopted the amendments to IFRS 7 for financial instruments which are valued at fair value. The amendments to IFRS 7 refer to
valuation hierarchy techniques which are based on three levels:



F-36

---







Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

3. FINANCIAL RISKS (Continued)

The
following table summarizes the financial assets and liabilities of the Group valued at fair value (in thousands of Euro):

Fair Value Measurements at
Reporting Date Using:Classification within
the Consolidated
Statement of
Financial PositionDecember 31,
2010Description

Level 1

Level 2

Level 3Foreign Exchange Contracts

Other short-term assets


1,484





1,484Interest Rate Derivatives

Other long-term liabilities


52,964





52,964Interest Rate Derivatives

Other short-term liabilities


901





901Foreign Exchange Contracts

Other short-term liabilities


4,689





4,689


As
of December 31, 2010, the Group did not have any Level 3 fair value measurements.

The
Group maintains policies and procedures with the aim of valuing the fair value of assets and liabilities using the best and most relevant data available.

The
Group portfolio of foreign exchange derivatives includes only forward foreign exchange contracts on the most traded currency pairs with maturity less than one year. The fair value of
the portfolio is valued using internal models that use observable market inputs including Yield Curves and Spot and Forward prices.

The
fair value of the interest rate derivatives portfolio is calculated using internal models that maximize the use of observable market inputs including Interest Rates, Yield Curves and
Foreign Exchange Spot prices.

4. SEGMENT INFORMATION

In accordance with IFRS 8Operating segments, the Group operates in two industry segments: (1) manufacturing
and
wholesale distribution; and (2) retail distribution.

The
following tables summarize the segment and geographic information deemed essential by the Group's management for the purpose of evaluating the Group's performance and for making
decisions about future allocations of resources.

In
accordance with an amendment to IFRS 8, issued on April 16, 2009, starting from January 1, 2010, the total amounts of assets for each reporting segment are no
longer disclosed as they are not regularly reported to the highest authority in the Group's decision-making process. Please refer to

F-37

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

4. SEGMENT INFORMATION (Continued)

note 10
"Goodwill and intangible assetsnet" for further details on the impairment loss of Euro 20.4 million recorded in the Retail distribution segment.

Manufacturing
and wholesale
distribution



Inter-segment
transactions
and corporate
adjustments(3)Retail
distribution(Amounts in thousands of Euro)

Consolidated2010Net sales(1)


2,236,403


3,561,632





5,798,035Income from operations(2)


461,854


424,384


(174,080
)

712,158Capital expenditures


98,724


131,633





230,357Depreciation and amortization


79,028


139,216


103,818


322,0622009Net sales(1)


1,955,340


3,138,978





5,094,318Income from operations(2)


356,032


360,769


(145,717
)

571,085Capital expenditures


81,175


119,234





200,409Depreciation and amortization


76,005


129,261


80,179


285,4452008Net sales(1)


2,092,465


3,109,146





5,201,611Income from operations(2)


413,505


421,268


(103,135
)

731,639Capital expenditures


125,489


170,947





296,436Depreciation and amortization


85,987


123,129


55,432


264,548


(1)Net
sales of both the Manufacturing and Wholesale Distribution segment and the Retail Distribution segment include sales to third-party customers only.(2)Income
from operations of the Manufacturing and Wholesale Distribution segment is related to net sales to third-party customers only, excluding the
"manufacturing profit" generated on the inter-company sales to the Retail Distribution segment. Income from operations of the Retail Distribution segment is related to retail sales, considering the
cost of goods acquired from the Manufacturing and Wholesale Distribution segment at manufacturing cost, thus including the relevant "manufacturing profit" attributable to those sales.(3)Inter-segment
transactions and corporate adjustments include corporate costs not allocated to a specific segment and amortization of acquired intangible
assets.


Information by geographical area

The geographic segments include Europe, North America (which includes the United States of America, Canada and Caribbean islands),
Asia-Pacific (which includes Australia, New Zealand, China, Hong Kong and Japan) and Other (which includes all other geographic locations, including South and Central America and the
Middle East). Sales are attributed to geographic segments based on the

F-38

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

4. SEGMENT INFORMATION (Continued)

customer's
location whereas, long-lived assets, net are the result of the combination of legal entities located in the same geographic area.

Years ended December 31(Amounts in thousands of Euro)

Europe(1)

North
America

Asia-
Pacific

Other

Consolidated2010Net sales


1,163,527


3,481,924


745,137


407,447


5,798,035Long-lived assets, net


369,520


670,896


177,803


10,911


1,229,1302009Net sales


1,072,412


3,065,937


641,657


314,311


5,094,318Long-lived assets, net


364,419


627,701


150,126


7,726


1,149,9722008Net sales


1,132,465


3,096,520


645,839


326,787


5,201,611Long-lived assets, net


373,462


651,238


141,339


4,941


1,170,980


(1)Long-lived
assets, net located in Italy represented 28, 29 and 30 percent of the Group's total fixed assets in 2010, 2009 and 2008,
respectively.


INFORMATION ON THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CURRENT ASSETS

5. CASH AND CASH EQUIVALENTS

Cash and cash equivalents are comprised of the following items (amounts in thousands of Euro):

As of December 31,2010

2009Cash at bank and post office


667,790


371,572Checks


6,916


5,689Cash and cash equivalents on hand


5,146


2,820Total


679,852


380,081


F-39

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

6. ACCOUNTS RECEIVABLENET

Accounts receivable consist exclusively of trade receivables and are recognized net of allowances
to adjust their carrying amount to the estimated realizable value. Accounts receivable are due within 12 months (amounts in thousands of Euro):

As of December 31,2010

2009Accounts receivable


689,260


649,821Allowance for doubtful accounts


(33,368
)

(30,937
)Total accounts receivablenet


655,892


618,884


The
following table shows the allowance for doubtful accounts roll-forward (amounts in thousands of Euro):

2010

2009Balance as of January 1


30,937


29,069Increases


3,701


1,417Decreases


(3,730
)

(1,314
)Translation difference and other


2,460


1,765Balance as of December 31


33,368


30,937


The
book value of the accounts receivable approximates their fair value.

As
of December 31, 2010, the gross amount of accounts receivable was equal to Euro 689,260 thousand (Euro 649,821 thousand as of December 31,
2009), including an amount of Euro 18,922 thousand covered by insurance and other guarantees (2.7 percent of gross receivables). The bad debt fund as of December 31, 2010
amounted to Euro 33,368 thousand (Euro 30,937 thousand as of December 31, 2009).

Write-downs
of accounts receivable are determined in accordance with the Group credit policy described in note 3 "Financial Risks."

Accruals
and reversals of the allowance for doubtful accounts are recorded within selling expenses in the consolidated statement of income.

The
maximum exposure to credit risk, as of the end of the reporting date, was represented by the fair value of accounts receivable which approximates their carrying amount.

The
Group believes that its exposure to credit risk does not call for other guarantees or credit enhancements.

F-40

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

6. ACCOUNTS RECEIVABLENET (Continued)

The
table below summarizes the quantitative information required by IFRS 7 based on the categories of receivables pursuant to Group policies:

Overdue
accounts
receivable
not included
in the
allowance for
doubtful
accounts
0 - 30 days
overdueAmount of
accounts
receivable
overdue but
not included
in the
allowance for
doubtful
accounts

Overdue
accounts
receivable
not included
in the
allowance for
doubtful
accounts
> 30 days overdueAllowance for
doubtful
accounts

Maximum
exposure to
credit riskDecember 31, 2010(Amounts in thousands of Euro)

Gross
receivablesReceivables of the Wholesale segment classified as GOOD


543,690


(5,753
)

537,937


46,295


30,628


15,668Receivables of the Wholesale segment classified as GOODUNDER CONTROL


26,734


(1,822
)

24,912


6,385


1,304


5,082Receivables of the Wholesale segment classified as RISK


24,485


(19,773
)

4,712


3,179


98


3,081Receivables of the Retail segment


94,351


(6,020
)

88,331


10,405


6,441


3,964Totals


689,260


(33,368
)

655,892


66,265


38,470


27,794


F-41

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

6. ACCOUNTS RECEIVABLENET (Continued)



Overdue
accounts
receivable
not included
in the
allowance for
doubtful
accounts
0 - 30 days
overdueAmount of
accounts
receivable
overdue but
not included
in the
allowance for
doubtful
accounts

Overdue
accounts
receivable
not included
in the
allowance for
doubtful
accounts
> 30 days overdueAllowance for
doubtful
accounts

Maximum
exposure to
credit riskDecember 31, 2009(Amounts in thousands of Euro)

Gross
receivablesReceivables of the Wholesale segment classified as GOOD


529,433





529,433


52,940


30,538


22,402Receivables of the Wholesale segment classified as GOODUNDER CONTROL


13,423


(1,433
)

11,990


3,897


830


3,067Receivables of the Wholesale segment classified as RISK


23,518


(23,466
)

52








Receivables of the Retail segment


83,447


(6,038
)

77,409


13,030


205


12,825Totals


649,821


(30,937
)

618,884


69,867


31,573


38,294


As
of December 31, 2010, the amount of overdue receivables which were not included in the bad debt fund was equal to 9.6 percent of gross receivables (10.8 percent
as of December 31, 2009) and 10.1 percent of receivables net of the bad debt fund (11.3 percent as of December 31, 2009). The Group does not expect any additional losses
over amounts already provided for.

7. INVENTORYNET

Inventories are comprised of the following items (amounts in thousands of Euro):

As of December 31,2010

2009Raw materials


115,277


112,760Work in process


52,507


52,368Finished goods


518,804


440,927Less: Inventory obsolescence reserves


(96,552
)

(81,392
)Total


590,036


524,663


The
increase of total inventory in 2010 as compared to 2009 is mainly due to increased production in the Chinese manufacturing facility as well as to fluctuations in currency exchange
rates.

F-42

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

8. OTHER ASSETS

Other assets comprise the following items (amounts in thousands of Euro):

As of December 31,2010

2009Sales taxes receivable


32,524


26,104Short-term borrowings


860


806Accrued income


1,501


1,272Receivables for royalties


2,078


2,229Other financial assets


26,364


43,545Total financial assets


63,327


73,956Income taxes receivable


70,720


33,413Advances to suppliers


9,487


1,545Prepaid expenses


66,399


61,424Other assets


16,825


28,027Total other assets


163,431


124,409Total other assets


226,759


198,365


Other
financial assets are composed of receivables from foreign currency derivatives amounting to Euro 1.5 million as of December 31, 2010
(Euro 1.0 million as of December 31, 2009), as well as other financial assets of the North America retail division totaling Euro 8.7 million as of
December 31, 2010 (Euro 17.2 million as of December 31, 2009).

The
increase in the income taxes receivable is mainly due to timing of payments made by certain U.S. subsidiaries to tax authorities which are expected to be utilized during the first
half of 2011.

Other
assets include the short-term portion of advance payments made to certain designers for future contracted minimum royalties totaling Euro 16.8 million as
of December 31, 2010 (Euro 28.0 million as of December 31, 2009).

Prepaid
expenses mainly relates to the timing of payments of monthly rental expenses incurred by the Group's North America and Asia-Pacific retail divisions.

The
net book value of financial assets is approximately equal to their fair value and this value also corresponds to the maximum exposure of the credit risk. The Group has no guarantees
or other instruments to manage credit risk.

F-43

---





Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

NON-CURRENT ASSETS

9.  PROPERTY, PLANT AND EQUIPMENTNET

Changes in items of property, plant and equipment are reported below (amounts in thousands of Euro):

Land and
buildings,
including
leasehold
improvementsMachinery
and
equipmentOther
equipmentAircraft

TotalAs of January 1, 2009


494,538


348,618


34,127


293,697


1,170,980Increases


33,709


65,633





101,067


200,409Decreases


(5,200
)

(2,628
)

(177
)

(3,623
)

(11,628
)Translation differences and other


1,487


38,900





(47,782
)

(7,395
)Depreciation expense


(53,015
)

(84,729
)

(1,593
)

(63,057
)

(202,394
)Balance as of December 31, 2009


471,519


365,794


32,357


280,302


1,149,972of which:Historical cost


766,625


880,851


39,814


554,479


2,241,769Accumulated depreciation


(295,106
)

(515,057
)

(7,457
)

(274,177
)

(1,091,797
)Total


471,519


365,794


32,357


280,302


1,149,972Increases


26,262


93,904





110,192


230,358Decreases


(1,031
)

(2,013
)




(5,877
)

(8,921
)Translation differences and other


25,547


36,552


(148
)

10,639


72,590Depreciation expense


(54,972
)

(127,014
)

(1,582
)

(31,302
)

(214,870
)Total balance as of December 31, 2010


467,325


367,223


30,627


363,954


1,229,130of which:Historical cost


820,833


1,017,958


37,853


673,051


2,549,696Accumulated depreciation


(353,508
)

(650,735
)

(7,226
)

(309,097
)

(1,320,566
)Total


467,325


367,223


30,627


363,954


1,229,130


Of
the total depreciation expense of Euro 214.9 million (Euro 202.4 million and Euro 190.6 million in 2009 and 2008, respectively),
Euro 60.4 million (Euro 55.5 million and Euro 57.6 million in 2009 and 2008, respectively) is included in cost of sales, Euro 102.5 million
(Euro 96.0 million and Euro 96.5 million in 2009 and 2008, respectively) in selling expenses, Euro 5.1 million (Euro 5.0 million and
Euro 0.6 million in 2009 and 2008, respectively) in advertising expenses and Euro 47.0 million (Euro 45.9 million and Euro 35.9 million in 2009
and 2008, respectively) in general and administrative expenses.

Other
equipment includes Euro 91.3 million for assets under construction as of December 31, 2010 (Euro 49.2 million as of December 31, 2009)
mainly relating to the opening and renovation of North America retail stores.

Leasehold
improvements totaled Euro 228.4 million and Euro 238.5 million as of December 31, 2010 and December 31, 2009, respectively.

F-44

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

10.  GOODWILL AND INTANGIBLE ASSETSNET

Changes in goodwill and intangible assets as of December 31, 2010 and 2009 were as follows (amounts in thousands of Euro):

Trade names
and
trademarks



Customer
relations,
contracts
and listsDistribution
network

Franchise
agreementsGoodwill

Other

TotalAs of January 1, 2009Historical cost


2,728,901


1,318,736


81,087


215,868


20,619


44,976


4,410,187Accumulated amortization


(38,554
)

(394,612
)

(15,179
)

(20,205
)

(3,870
)

(15,923
)

(488,343
)Total


2,690,347


924,124


65,908


195,663


16,749


29,053


3,921,844Increases

















441


441Decreases


(7,239
)




(300
)







(1,874
)

(9,413
)Acquisitions


5,077


576














5,653Translation differences and other


651


6,873


(1,793
)

(4,470
)

(456
)

2,436


3,241Amortization expense





(58,867
)

(3,539
)

(15,075
)

(1,029
)

(4,541
)

(83,051
)Balance as of December 31, 2009


2,688,835


872,705


60,276


176,119


15,265


25,515


3,838,715Historical cost


2,727,445


1,330,308


78,279


210,509


20,025


41,675


4,408,242Accumulated amortization


(38,610
)

(457,603
)

(18,003
)

(34,390
)

(4,760
)

(16,160
)

(569,527
)Total


2,688,835


872,705


60,276


176,119


15,265


25,515


3,838,715Increases





308











957


1,265Decreases




















Acquisitions


21,465





2,494











23,959Translation differences and other


200,528


66,064


4,375


12,574


1,117


3,999


288,657Impairment and Amortization expense


(20,432
)

(61,881
)

(3,854
)

(15,296
)

(1,082
)

(4,646
)

(107,192
)Balance as of December 31, 2010


2,890,397


877,196


63,290


173,397


15,299


25,824


4,045,404Historical cost


2,953,383


1,423,092


86,389


225,364


21,479


45,094


4,754,800Accumulated amortization


(62,986
)

(545,896
)

(23,098
)

(51,967
)

(6,180
)

(19,270
)

(709,396
)Total


2,890,397


877,196


63,290


173,397


15,299


25,824


4,045,404


The increase of goodwill is mainly due to the acquisition of OF Pty LTD group. The acquisition included 47 corporate stores and
9 franchises. Total consideration paid was approximately Euro 14.6 million. The acquisition was accounted for according to IFRS 3 (Revised). The Group used various method
to calculate the fair value of assets acquired and liabilities assumed The goodwill recorded in the consolidated financial statements as of December 31, 2010 totals
Euro 14.6 million. No intangibles associated to the business combinations were realized. The purchase price allocation has not been finalized as of December 31, 2010 and will be
reflected in the 2011 financial statements.

Amortization
expense of Euro 107.2 million (Euro 83.1 million and Euro 73.9 million in 2009 and 2008, respectively) is included in general and
administrative expenses for Euro 106.2 million (Euro 83.1 million and Euro 73.9 million in, 2009 and 2008, respectively) and in cost of sales for

F-45

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

10.  GOODWILL AND INTANGIBLE ASSETSNET (Continued)

Euro 1.0 million
(Euro 0 million in 2009 and 2008). Amortization expense for goodwill relates to the impairment loss recorded in the Retail distribution segment in 2010 for
Euro 20.4 million.

Impairment of goodwill

Pursuant to IAS 36Impairment of Assets, the Group has identified the following four
cash-generating units:Wholesale,Retail North America,Retail
Asia-PacificandRetail Other. The cash-generating units reflect the distribution model adopted by the
Group.

The
value of goodwill allocated to each cash-generating unit is reported in the following table (amounts in thousands of Euro):

2010

2009Wholesale


1,116,119


1,054,956North America retail


1,372,638


1,292,685Asia-Pacific retail


358,317


303,262Retailother


43,323


37,932Total


2,890,397


2,688,835


The
information required by paragraph 134 of IAS 36 is provided below only for the Wholesale and Retail North America cash-generating units, since the value of
goodwill allocated to these two units is a significant component of the total Group goodwill.

The
recoverable amount of each cash-generating unit has been verified by comparing its net assets carrying amounts to its value in use.

The
main assumptions for determining the value in use are reported below and refer to both cash-generating units:



This
growth rate is in line with the rate of the manufacturing sector of the countries in which the Group operates. The discount rate has been determined on the basis of market
information on the cost of money and the specific risk of the industry (Weighed Average Cost of Capital, WACC). In particular, the Group used a methodology to determine the discount rate which was in
line with that utilized in the previous year, therefore, considering the rates of return on long-term government bonds and the average capital structure of a group of comparable companies
were taken into account.

The
recoverable amount of cash-generating units has been determined by utilizing cash flow forecasts based on the three-year plan for the 2011-2013
period, prepared by management on the basis of the results attained in previous years as well as management expectationssplit by geographical areaon future trends in the
eyewear market for both the Wholesale and Retail distribution segments. The time period of cash flows was extended to the 2014-2015 period by creating forecasts on the basis of the growth
rate reported above. At the end of the cash flow forecasting period, a terminal value was estimated in order to reflect the value of the cash-generating unit after the period of the plan.
The terminal

F-46

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

10.  GOODWILL AND INTANGIBLE ASSETSNET (Continued)

values
were calculated as a perpetuity at the same growth rate, as described above, and represent the present value, in the last year of the forecast, of all future perpetual cash flows. In
particular, it should be noted that, in accordance with the provisions of paragraph 71 of IAS 36, future cash flows of the cash-generating units in the Retail distribution
segment were adjusted in order to reflect the transfer prices at market conditions. This adjustment was made since the cash- generating units belonging to this segment generate distinct
and independent cash flows whose products are sold within an active market. The impairment test performed as of the balance sheet date resulted in a recoverable value greater than the carrying amount
(net operating assets) of the abovementioned cash-generating units. No external impairment indicators were identified which could highlight potential risks of impairment. In percentage
terms, the surplus of the recoverable amount of the cash-generating unit over its carrying amount was equal to 115 percent and 182 percent of the carrying amount of the
Wholesale and Retail North America cash-generating units, respectively: It should be noted that (i) the discount rate which makes the recoverable amount of the cash generating units
equal to their carrying amount is approximately 13 percent for Wholesale and 17 percent for Retail North America and (ii) the growth rate which makes the recoverable amount of the
cash-generating units equal to their carrying amounts would be negative.

In
addition, any reasonable changes to the abovementioned assumptions used to determine the recoverable amount (i.e. growth rate changes of +/-1 percent and
discount rate changes of +/-0.5 percent) would not significantly affect the impairment test results.

For
fiscal 2010, the impairment test of goodwill for the retail Asia-Pacific cash-generating unit has resulted in an impairment loss of
Euro 20.4 million. The
impairment loss has been recorded in the "general and administrative" line within the consolidated statement of income. This impairment loss is not considered material as compared to the total amount
of the Group's goodwill.

The
impairment noted above is due mostly to the economic uncertainties of the Australia-New Zealand, region, which resulted in an increase in competition, and adverse weather
conditions which occurred in late 2010 causing the performance of the Asia-Pacific cash-generating units to be lower than expected. In view of this management revised the
expected cash flows to reflect additional investment and expected delays in the achievement of planned targets.

11.  INVESTMENTS

Investments amounted to Euro 54.1 million (Euro 46.3 million as of December 31, 2009). The balance as of 2010 and 2009 mainly includes the
40 percent ownership in Multiopticas Internacional S.L. (MOI). Under the terms of the agreement the Group has a call option for the remaining 60 percent of MOI. The call option will be
exercisable by the Group at a price to be determined on the basis of MOI's sales and EBITDA values at the time of the exercise. The increase as compared to 2009 is primarily due to the agreement with
a third party entered into in February 2010 by which the third party manages the company, Eyebiz Pty Limited (Eyebiz), which serves as the Group's Sydney-based optical lens finishing laboratory. As a
result of the transaction Eyebiz has become an associate of the Group. The Group has a 30 percent ownership in Eyebiz. The investment in Eyebiz is accounted for according to the equity method
in the consolidated financial statements of the Group as of December 31, 2010.

F-47

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

12.  OTHER NON-CURRENT ASSETS

As of December 31,(Amounts in thousands of Euro)

2010

2009Other financial assets


34,014


18,026Other assets


114,111


129,565Total other non-current assets


148,125


147,591


Other
financial assets primarily include security deposits totaling Euro 24.8 million (Euro 10.5 million as of December 31, 2009).

The
carrying value of financial assets approximates their fair value and this value also corresponds to the Group's maximum exposure to credit risk. The Group does not have guarantees or
other instruments for managing credit risk.

Other
assets primarily include advance payments made to certain licensees for future contractual minimum royalties totaling Euro 106.1 million
(Euro 122.9 million as of December 31, 2009).

13. DEFERRED TAX ASSETS

Deferred tax assets were Euro 364.3 million and Euro 356.7 million as of December 31, 2010 and December 31, 2009, respectively. Deferred tax
assets primarily refer to temporary differences between the tax base and the book value of inventories, intangible assets, pension funds and net loss carry forwards.

As of December 31,(Amounts in thousands of Euro)

2010

2009Inventories


72,448


54,992Insurance and other reserves


11,666


14,393Net operating loss carry forwards


26,546


43,499Rights of return


9,148


8,085Deferred tax on derivatives


18,711


17,903Employee-related reserves (Including pension liability)


73,837


73,432Occupancy reserves


17,875


17,979Trade names


72,831


76,971Fixed assets


9,201


10,626Other


52,038


38,826Total deferred tax assets


364,300


356,706


F-48

---





Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

CURRENT LIABILITIES

14. SHORT-TERM BORROWINGS

Short-term borrowings at December 31, 2010 reflect current account overdrafts with various banks as well as uncommitted short-term lines of credits with
different financial institutions. The interest rates on these credit lines are floating. The credit lines may be used, if necessary, to obtain letters of credit.

The
book value of bank overdrafts is approximately equal to their fair value.

15. CURRENT PORTION OF LONG-TERM DEBT

This item consists of the current portion of loans granted to the Group, as further described below in note 19 "Long-term debt."

16. ACCOUNTS PAYABLE

Accounts payable consist of invoices received and not yet paid at the reporting date, in addition to invoices to be received, accounted for on an accrual basis.

The
balance, which is fully payable within 12 months, is detailed below:

As of December 31,(Amounts in thousands of Euro)

2010

2009Accounts payable


399,353


308,499Invoices to be received


138,389


126,105Total


537,742


434,604


The
carrying value of accounts payable is approximately equal to their fair value.

17. INCOME TAXES PAYABLE

The balance of income taxes payable is detailed below:

As of December 31,(Amounts in thousands of Euro)

2010

2009Current year income taxes payable fund


77,425


27,901Income taxes advance payment


(17,358
)

(16,697
)Total


60,067


11,204


F-49

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

18. OTHER LIABILITIES

As of December 31,(Amounts in thousands of Euro)

2010

2009Premiums and discounts to suppliers


27,507


24,179Sales commissions


1,135


1,775Leasing rental


22,370


16,051Insurance


9,255


9,476Sales taxes payable


35,994


36,336Salaries payable


183,559


155,101Due to social security authorities


26,156


21,483Sales commissions payable


7,154


3,363Royalties payable


1,602


1,096Other financial liabilities


125,858


192,849Total financial liabilities


440,590


461,709Deferred income


1,356


1,480Customers' right of return


27,744


27,334Advances from customers


53,835


36,680Other liabilities


25,755


26,933Total liabilities


108,690


92,427Total other current liabilities


549,280


554,136


The
decrease of other financial liabilities is primarily due to the payment in May 2010 of the purchase price of Euro 61.8 million for the acquisition of
the non-controlling interest in the Group's Turkish subsidiary (Luxottica Gözlük Endüstri ve Ticaret Anonim Sirketi).

Other
liabilities consist of the current portion of funds set aside for the provision for risks that primarily include:



F-50

---







Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

NON-CURRENT LIABILITIES

19. LONG-TERM DEBT

Long-term debt consists of the following (amounts in thousands of Euro):

As of
December 31,
2010

As of
December 31,
2009Luxottica Group S.p.A. credit agreements with various financial institutions(a)


545,552


544,585Senior unsecured guaranteed notes(b)


943,112


205,297Credit agreement with various financial institutions(c)


242,236


750,228Credit agreement with various financial institutions for Oakley acquisition(d)


897,484


1,062,816Short-term capital lease obligations


1,141


970Other loans with banks and other third parties, including long-term capital lease obligations, interest at various rates,
payable in installments through 2014(e)


3,112


4,179Total


2,632,637


2,568,075Less: Current maturities


197,566


166,279Long-Term Debt


2,435,071


2,401,796




F-51

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

19. LONG-TERM DEBT (Continued)





F-52

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

19. LONG-TERM DEBT (Continued)



F-53

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

19. LONG-TERM DEBT (Continued)





F-54

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

19. LONG-TERM DEBT (Continued)



F-55

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

19. LONG-TERM DEBT (Continued)

Long-term
debt, including capital lease obligations, as of December 31, 2010 matures as follows:

Years ended December 31,(Amounts in thousands of Euro)2011


197,5662012


521,9582013


690,7362014


300,2572015 and subsequent years


921,808Effect deriving from the adoption of the amortized cost method


312Total


2,632,637


The
net financial position is defined below:

December 31,(Amounts in thousands of Euro)

2010

2009A

Cash and cash equivalents


679,852


380,081B

Other availabilities





C

Marketable securities





D

Availabilities (A) + (B) + (C)


679,852


380,081E

Current Investments





F

Short-term borrowings


158,648


148,951G

Current portion of long-term debt


197,566


166,279H

Other liabilities





I

Current Financial Liabilities (F) + (G) + (H)


356,214


315,230J

Net Current Financial Liabilities (I)  (E)  (D)


(323,638
)

(64,851
)K

Long-term debt


1,491,959


2,204,229L

Notes payable


943,112


197,567M

Other non-current liabilities





N

Total Non-current Financial Liabilities (K) + (L) + (M)


2,435,071


2,401,796O

Net Financial Position(J) + (N)


2,111,433


2,336,945


Our
net financial position with respect to related parties is not material.

F-56

---





Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

20.  LIABILITY FOR TERMINATION INDEMNITIES

Liabilities for termination indemnity were equal to Euro 45.4 million (Euro 44.6 million as of December 31, 2009).

This
item primarily includes the liabilities related to the post-employment benefits of the Italian companies' employees (hereinafter "TFR"), accounted for in accordance with
Article 2120 of the Italian Civil Code.

Effective
January 1, 2007, the TFR system was reformed, and under the new law, employees are given the ability to choose where the TFR compensation is invested, whereas such
compensation otherwise would be directed to the National Social Security Institute or Pension Funds. As a result, contributions under the reformed TFR system are accounted for as a defined
contribution plan. The liability accrued until December 31, 2006 continues to be considered a defined benefit plan.
Therefore, each year, the Group adjusts its accrual based upon headcount and inflation, excluding changes in compensation level.

The
liabilities as of December 31, 2010 amounted to Euro 37.8 million (Euro 37.8 million as of December 31, 2009).

Contribution
expense was Euro 16.2 million, Euro 15.0 million and Euro 14.9 million for the years 2010, 2009 and 2008, respectively.

In
application of Accounting Principle IAS 19, the valuation of TFR liability accrued as of December 31, 2006 was based on the Projected Unit Credit Cost method. The main
assumptions utilized are reported below:

2010

2009ECONOMIC ASSUMPTIONSDiscount rate

4.60%

5.10%Annual TFR increase rate

3.00%

3.00%Death probability:

Those determined by the General Accounting Department of the Italian Government, named RG48

Those determined by the General Accounting Department of the Italian Government, named RG48Retirement probability:

Assuming the attainment of the first of the retirement requirements applicable for the Assicurazione Generale Obbligatoria (General Mandatory Insurance)

Assuming the attainment of the first of the retirement requirements applicable for the Assicurazione Generale Obbligatoria (General Mandatory Insurance)


F-57

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

20.  LIABILITY FOR TERMINATION INDEMNITIES (Continued)

Movements
in liabilities during the course of the year are detailed in the following table:

(Amounts in thousands of Euro)

2010

2009

2008Liabilities at the beginning of the period


37,829


39,712


34,409Expenses for interests


1,929


2,090


2,223Actuarial loss (income)


1,575


(819
)

1,246Benefits paid


(3,495
)

(3,154
)

(4,163
)Liabilities at the end of the period


37,838


37,829


39,712


21.  DEFERRED TAX LIABILITIES

Deferred tax liabilities amounted to Euro 429.8 million and Euro 396.0 million, respectively, as of December 31, 2010 and December 31, 2009.

As of December 31,(Amounts in thousands of Euro)

2010

2009Dividends


5,689


10,813Trade name


236,346


225,678Fixed assets


76,940


51,642Other intangibles


91,357


98,811Other


19,516


9,105Total


429,848


396,048


Deferred
tax liabilities primarily refer to temporary differences between the tax base and the book value of intangible and fixed assets.

22.  OTHER NON-CURRENT LIABILITIES

As of December 31,(Amounts in thousands of Euro)

2010

2009Provision for risk


82,855


99,050Other liabilities


113,077


113,517Other financial liabilities


114,658


137,461Total other non-current liabilities


310,590


350,028


The
provision for risks primarily includes:

1.     accruals
for "self-insurance" covering specific risks, amounting to Euro 26.9 million (Euro 25.2 million as of December 31,
2009);

2.     accruals
for various legal disputes arising from normal business activities, totaling Euro 6.0 million (Euro 3.0 million as of
December 31, 2009); and

F-58

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Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

22.  OTHER NON-CURRENT LIABILITIES (Continued)

3.     accruals
for tax liabilities of Euro 37.5 million (Euro 51.3 million as of December 31, 2009). The decrease is primarily related to
certain contingent tax liabilities for Euro 19.9 million originally recorded as part of the 2006 sale of our Things Remembered retail business, which either settled or expired. The
release of the provision has been recorded in the discontinued operations line within the consolidated statement of income as of December 31, 2010. The entire discontinued operations relate to
release of the tax reserve noted above.

Other
liabilities primarily include the liabilities for U.S. pension funds.

The
decrease of other financial liabilities as of December 31, 2010 as compared to December 31, 2009 was mainly due to the payment of the financial liabilities relating to
the purchase of the remaining non-controlling interests in our subsidiary SGH UK Ltd., which occurred on July 30, 2010 (the financial liabilities were
Euro 31.2 million at December 31, 2009).

Information
regarding post-employment employee benefits is provided below.

Pension funds

Qualified Pension PlansUS Holdings sponsors a qualified noncontributory defined benefit pension plan, the Luxottica Group Pension Plan ("Lux Pension
Plan"), which provides for the payment of benefits to eligible past and present employees of US Holdings upon retirement. Pension benefits are gradually accrued based on length of service and annual
compensation under a cash balance formula. Participants become vested in the Lux Pension Plan after three years of vesting service as defined by the Lux Pension Plan.

Nonqualified
Pension Plans and AgreementsUS Holdings also maintains a nonqualified, unfunded supplemental executive retirement plan ("Lux SERP") for participants of its
qualified pension plan to provide benefits in excess of amounts permitted under the provisions of prevailing tax law. The pension liability and expense associated with this plan are accrued using the
same actuarial methods and assumptions as those used for the qualified pension plan. This plan's benefit provisions mirror those of the Lux Pension Plan.

US
Holdings also sponsors the Cole National Group, Inc. Supplemental Pension Plan. This plan is a nonqualified unfunded SERP for certain participants of the former Cole pension
plan who were designated by the Board of Directors of Cole on the recommendation of Cole's chief executive officer at such time. This plan provides benefits in excess of amounts permitted under the
provisions of the prevailing tax law. The pension liability and expense associated with this plan are accrued using the same actuarial methods and assumptions as those used for the qualified pension
plan.

F-59

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Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

22.  OTHER NON-CURRENT LIABILITIES (Continued)

The
following tables provide key information pertaining to the Lux Plan and SERPs (amounts in thousands of Euro):

Obligations and Funded StatusPension Plan

SERPs2010

2009

2008

2010

2009

2008Change in benefit obligations:Benefit obligationbeginning of period


334,015


313,520


272,611


11,299


12,014


10,361Service cost


18,640


18,443


17,344


367


466


552Interest cost


21,700


19,476


17,476


627


664


718Actuarial (gain)/loss


26,417


1,952


359


455


(1,142
)

102Settlement loss











81





Benefits paid


(14,152
)

(9,545
)

(9,142
)

(23
)

(367
)

(289
)Settlements











(2,293
)




Translation difference


22,696


(9,831
)

14,872


827


(336
)

570Benefit obligationend of period


409,316


334,015


313,520


11,340


11,299


12,014




Pension Plan

SERPs2010

2009

2008

2010

2009

2008Change in plan assets:Fair value of plan assetsbeginning of period


238,168


184,379


224,534








Expected return on plan assets


21,185


15,205


17,720








Actuarial gain/(loss) on plan assets


14,462


23,790


(73,341
)







Employer contribution


39,164


31,267


16,318


2,316


367


289Benefits paid


(14,152
)

(9,546
)

(9,142
)

(23
)

(367
)

(289
)Translation difference


15,675


(6,927
)

8,290


(2,293
)




Fair value of plan assetsend of period


314,501


238,168


184,379








Unfunded statusend of period


94,815


95,847


129,141


11,340


11,299


12,014


F-60

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

22.  OTHER NON-CURRENT LIABILITIES (Continued)

Amounts
to be recognized in the statement of financial position and profit or loss along with actual return on assets were as follows (amounts in thousands of Euro):

Pension Plan

SERPs2010

2009

2008

2010

2009

2008Amounts recognized in the statement of financial position:Liabilities:Present value of the obligation


409,316


334,015


313,520


11,340


11,299


12,014Fair value of plan assets


314,501


238,168


184,379








Liability recognized in statement of financial position


94,815


95,847


129,141


11,340


11,299


12,014Accumulated other comprehensive income:Net gain/(loss), beginning of year


(63,659
)

(87,429
)

(9,107
)

(2,627
)

(3,849
)

(3,545
)Asset gain/(loss)


14,462


23,790


(73,341
)







Liability experience gain/(loss)


1,744


(1,761
)

(4,380
)

421


1,228


(948
)Liability assumption change gain/(loss)


(28,161
)

(191
)

4,020


(875
)

(86
)

825Translation difference


(4,527
)

1,932


(4,621
)

(187
)

80


(181
)Accumulated other comprehensive income, end of year


(80,141
)

(63,659
)

(87,429
)

(3,268
)

(2,627
)

(3,849
)Service cost


18,640


18,443


17,344


367


466


552Interest cost


21,700


19,476


17,476


628


663


718Expected return on plan assets


(21,185
)

(15,204
)

(17,720
)







Settlement loss











81





Expense recognized in profit or loss


19,156


22,715


17,100


1,076


1,129


1,270Actual return on assets:Expected return on assets


21,185


15,205


17,720








Actuarial gain/(loss) on plan assets


14,462


23,790


(73,341
)







Actual return on assets


35,646


38,995


(55,621
)










During
2010, the Lux SERP plan settled a portion of its benefit obligations through lump sum cash payments to certain plan participants. As a result of this action, the projected benefit
obligation was re-measured as of July 1, 2010. US Holdings recognized an actuarial loss of Euro 81 thousand in earnings at the time of re-measurement.

F-61

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

22.  OTHER NON-CURRENT LIABILITIES (Continued)

The
following tables show the main assumptions used to determine the period benefit cost and the benefit obligation.

Pension Plan

SERPs2010

2009

2010

2009Weighted-average assumptions used to determine benefit obligations:Discount rate

5.50%

6.15%

5.50%

6.15%Rate of compensation increase

5% / 3% / 2%

4% / 3% / 1%

5% / 3% / 2%

4% / 3% / 1%Expected long-term return on plan assets

8.00%

8.00%

N/A

N/A




Pension Plan2010

2009

2008Weighted-average assumptions used to determine net periodic benefit cost:Discount rate

5.50%

6.15%

6.30%Expected long-term return on plan assets

8.00%

8.00%

8.00%Rate of compensation increase

5% / 3% / 2%

4% / 3% / 1%

6% / 5% / 4%Mortality table

RP-2000

RP-2000

RP-2000




SERPs2010

2009

2008Weighted-average assumptions used to determine net periodic benefit cost:Discount rate:For the year ended December 31

N/A

6.15%

6.30%For the period prior to re-measurement

6.15%

N/A

N/AFor the period after re-measurement

5.50%

N/A

N/AExpected long-term return on plan assets

8.00%

8.00%

8.00%Rate of compensation increase

5% / 3% / 2%

4% / 3% / 1%

6% / 5% / 4%Mortality table

RP-2000

RP-2000

RP-2000


F-62

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

22.  OTHER NON-CURRENT LIABILITIES (Continued)

Defined
benefit plan data for the current and previous four annual periods are as follows:

(Amounts in thousands of Euro)

2010

2009

2008

2007

2006Pension Plans:Defined benefit obligation


409,316


334,015


313,520


272,611


277,468Fair value of plan assets


314,501


238,168


184,379


224,533


224,262Plan surplus/(deficit)


94,815


95,847


129,141


48,078


53,206Plan liabilities experience gain/(loss)


1,744


(1,761
)

(4,379
)

(5,212
)

(6,414
)Plan assets experience gain/(loss)


14,462


23,790


(73,341
)

(2,619
)

3,698SERPs:Defined benefit obligation


11,340


11,299


12,015


10,361


8,512Fair value of plan assets














Plan surplus/(deficit)


(11,340
)

(11,299
)

(12,015
)

(10,361
)

(8,512
)Plan liabilities experience gain/(loss)


421


1,228


(927
)

2,039


(1,799
)Plan assets experience gain/(loss)

















The
Group's discount rate is developed using a third party yield curve derived from non-callable bonds of at least an Aa rating by Moody's Investor Services or at least an AA
rating by Standard & Poor's. Each bond issue is required to have at least U.S. $250 million par outstanding. The yield curve compares the future expected benefit payments of the Lux
Pension Plan to these bond yields to determine an equivalent discount rate.

The
Group uses an assumption for salary increases based on a graduated approach of historical experience. The Group's experience shows salary increases that typically vary by age.

In
developing the long-term rate of return assumption, the Group considers its asset allocation. The Group analyzed historical rates of return being earned for each asset
category over various periods of time. Additionally, the Group considered input from its third-party pension asset managers, investment consultants and plan actuaries, including their review of asset
class return expectations and long-term inflation assumptions.

Plan
AssetsThe Lux Pension Plan's investment policy is to invest plan assets in a manner to ensure over a long-term investment horizon that the plan is
adequately funded; maximize investment return within reasonable and prudent levels of risk; and maintain sufficient liquidity to make timely benefit and administrative expense payments. This
investment policy was developed to provide the framework within which the fiduciary's investment decisions are made, establish standards to measure the investment manager's and investment consultant's
performance, outline the roles and responsibilities of the various parties involved, and describe the ongoing review process. The investment policy identifies target asset allocations for the plan's
assets at 40 percent Large Cap U.S. Equity, 10 percent Small Cap

F-63

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

22.  OTHER NON-CURRENT LIABILITIES (Continued)

U.S.
Equity, 15 percent International Equity, and 35 percent Fixed Income Securities, but an allowance is provided for a range of allocations to these categories as described in the table below.

Asset Class as a Percent of
Total AssetsAsset Category

Minimum

MaximumLarge Cap U.S. Equity


37
%

43
%Small Cap U.S. Equity


8
%

12
%International Equity


13
%

17
%Fixed Income Securities


32
%

38
%Cash and Equivalents





5
%


The
actual allocation percentages at any given time may vary from the targeted amounts due to changes in stock and bond valuations as well as timing of contributions to, and benefit
payments from, the pension plan trusts. The Lux Pension Plan's investment policy intends that any divergence from the targeted allocations should be of a short duration, but the appropriate duration
of the divergence will be determined by the Investment Subcommittee of the Luxottica Group Employee Retirement Income Security Act of 1974 ("ERISA") Plans Compliance and Investment Committee with the
advice of investment managers and/or investment consultants based on current market conditions. During 2010, the Committee reviewed the Lux Pension Plan's asset allocation monthly and if the
allocation was not within the above ranges, the Committee re-balanced the allocations if appropriate based on current market conditions.

Plan
assets are invested in diversified portfolios consisting of an array of asset classes within the above target allocations and using a combination of active and passive strategies.
Passive strategies involve investment in an exchange-traded fund that closely tracks an index fund. Active strategies employ multiple investment management firms. Risk is controlled through
diversification among asset classes, managers, styles, market capitalization (equity investments) and individual securities. Certain transactions and securities are prohibited from being held in the
Lux Pension Plan's trusts, such as ownership of real estate other than real estate investment trusts, commodity contracts, and American Depositary Receipts ("ADR") or common stock of the Group. Risk
is further controlled both at the asset class and manager level by assigning benchmarks and excess return targets. The investment managers are monitored on an ongoing basis to evaluate performance
against the established market benchmarks and return targets.

Quoted
market prices are used to measure the fair value of plan assets, when available. If quoted market prices are not available, the inputs utilized by the fund manager to derive net
asset value are observable and no significant adjustments to net asset value are necessary.

ContributionsUS
Holdings expects to contribute Euro 48,104 thousand to its pension plan and Euro 421 thousand to the SERP in 2011.

Other
BenefitsUS Holdings provides certain post-employment medical, disability and life insurance benefits. The Group's accrued liability related to this
obligation as of December 31, 2010 and 2009 was Euro 1,880 thousand and Euro 1,360 thousand, respectively, and is included in other long-term liabilities
in the consolidated statement of financial position.

F-64

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

22.  OTHER NON-CURRENT LIABILITIES (Continued)

US
Holdings sponsors the following additional benefit plans, which cover certain present and past employees of some of its U.S. subsidiaries:

a)    US
Holdings provides, under individual agreements, post-employment benefits for continuation of health care benefits and life insurance coverage to former
employees after employment. As of December 31, 2010 and 2009, the accrued liability related to these benefits was Euro 582 thousand and Euro 627 thousand,
respectively, and is included in other long-term liabilities in the consolidated statement of financial position.

b)    US
Holdings established and maintains the Cole National Group, Inc. Supplemental Retirement Benefit Plan, which provides supplemental retirement benefits for
certain highly compensated and management employees who were previously designated by the former Board of Directors of Cole as participants. This is an unfunded noncontributory defined contribution
plan. Each participant's account is credited with interest earned on the average balance during the year. This plan was frozen as to future salary credits on the effective date of the Cole acquisition
in 2004. The plan liability of Euro 848 thousand and Euro 869 thousand at December 31, 2010 and 2009, respectively, is included in other long-term
liabilities in the consolidated statement of financial position.

The
Group continues to participate in superannuation plans in Australia and Hong Kong. The plans provide benefits on a defined contribution basis for employees upon retirement,
resignation, disablement or death. Contributions to defined contribution superannuation plans are recognized as an expense as the contributions are paid or become payable to the fund. Contributions
are accrued based on legislated rates and annual compensation. The Group's accrued liability related to this obligation as of December 31, 2010 and 2009 was Euro 3,642 thousand
and Euro 3,045 thousand, respectively, and is included in other long-term liabilities in the consolidated statement of financial position.

Health Benefit PlansUS Holdings partially subsidizes health care benefits for eligible retirees. Employees generally
become eligible for retiree
health care benefits when they retire from active service between the ages of 55 and 65. Benefits are discontinued at age 65. During 2009, US Holdings provided for a one-time special
election of early retirement to certain associates age 50 or older with 5 or more years of service. Benefits for this group are also discontinued at age 65 and the resulting special termination
benefit is immaterial.

The
plan liability of Euro 3,277 thousand and Euro 3,482 thousand at December 31, 2010 and 2009, respectively, is included in other
long-term liabilities on the consolidated statement of financial position.

The
cost of this plan in 2010 and 2009 as well as the 2011 expected contributions are immaterial.

For
2011, a 9.5 percent (10.0 percent for 2010) increase in the cost of covered health care benefits was assumed. This rate was assumed to decrease gradually to 5 percent for 2020 and
remain at that level thereafter. The health care cost trend rate assumption could have a significant effect on the amounts reported. A 1.0 percent increase or decrease in the health care trend rate
would not have a material impact on the consolidated financial statements. The weighted-average discount rate used in determining the accumulated postretirement benefit obligation was 5.5 percent at
December 31, 2010 and 6.15 percent at December 31, 2009.

The
weighted-average discount rate used in determining the net periodic benefit cost for 2010, 2009 and 2008 was 6.15 percent, 6.3 percent and 6.5 percent, respectively.

F-65

---





Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

23.  LUXOTTICA GROUP STOCKHOLDERS' EQUITY

Capital Stock

The share capital of Luxottica Group S.p.A., as of December 31, 2010, amounts to Euro 27,964,632.60 and is comprised of 466,077,210 ordinary
shares with a par value of Euro 0.06 each.

As
of January 1, 2010, the share capital amounted to Euro 27,863,182.98 and was comprised of 464,386,383 ordinary shares with a par value of Euro 0.06 each.

Following
the exercise of 1,690,827 options to purchase ordinary shares granted to employees under existing stock option plans, the share capital grew by Euro 101,449.62 during
2010.

The
total options exercised in 2010 were 1,690,827, of which 164,400 refer to the 2001 Plan, 482,350 refer to the 2002 Plan, 221,200 refer to the 2003 Plan, 368,877 refer to the 2004
Plan, 235,000 refer to the Extraordinary 2004 Plan, and 219,000 refer to the 2005 Plan.

Legal reserve

This reserve represents the portion of the Company's earnings that are not distributable as dividends, in accordance with Article 2430 of the Italian Civil
Code.

Additional paid-in capital

This reserve increases with the expensing of options or excess tax benefits from the exercise of options.

Retained earnings

These include subsidiaries' earnings that have not been distributed as dividends and the amount of consolidated companies' equities in excess of the corresponding
carrying amounts of investments. This item also includes amounts arising as a result of consolidation adjustments.

Translation reserve of foreign operations

Translation differences are generated by the translation into Euro of financial statements prepared in currencies other than Euro.

Treasury reserve

Treasury reserve is equal to Euro 112.5 million (Euro 82.7 million as of December 31, 2009). The increase is due to the share
buyback programs approved at the stockholders' meeting on October 29, 2009 ("2009 Program"), intended to provide the Company with treasury shares to efficiently manage its share capital and to
implement its Performance Share Plan.

Under
the 2009 Program, the Company purchased in 2010 on the Milan Stock Exchange's Mercato Telematico Azionario (MTA) an aggregate amount of 3,355,726 shares at an average price of
Euro 19.85 for an aggregate amount of Euro 66,625,044.

In
parallel with the purchases of shares by the Company Arnette Optic Illusions, Inc. ("Arnette"), a U.S. subsidiary, sold on the MTA 3,669,962 Luxottica Group ordinary shares at
an average price of Euro 20.12 for an aggregate amount of Euro 73,823,196.

F-66

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

24.  NON-CONTROLLING INTERESTS

Equity attributable to non-controlling interests amounts to Euro 13,029 thousand and Euro 16,376 thousand as of December 31, 2010 and
December 31, 2009, respectively. The decrease is primarily due to the payment of dividends of Euro 9,208 thousand, partially offset by results for the period equal to
Euro 5,072 thousand.

25.  INFORMATION ON THE CONSOLIDATED STATEMENT OF INCOME

OTHER INCOME/(EXPENSE)

The composition of other income/(expense) is as follows (amounts in thousands of Euro):

Interest Expense

2010

2009

2008Interest expense on bank overdrafts


(1,776
)

(4,620
)

(15,687
)Interest expense on loans


(99,028
)

(99,382
)

(102,333
)Interest expense on derivatives


(3,950
)

(1,820
)

(2,792
)Other interest expense


(2,233
)

(3,310
)

(2,190
)Total interest expense


(106,987
)

(109,132
)

(123,002
)




Interest Income

2010

2009

2008Interest income on bank accounts


4,231


4,005


7,920Interest income on securities


829


436


2,962Interest on derivatives


1,536


776


894Interest income on loans


1,898


1,670


1,489Total interest income


8,494


6,887


13,265Othernet from derivative financial instruments and translation differences


(3,287
)

(349
)

(10,378
)Othernet


(4,843
)

(3,707
)

(23,153
)Total othernet


(8,130
)

(4,056
)

(33,531
)


As
of December 31, 2008, Othernet included the loss on the sale of a financial receivable received upon the sale of Things Remembered for a total amount of
Euro 22.8 million.

PROVISION FOR INCOME TAXES

The income tax provision is as follows:

Income Tax Provision(Amounts in thousands of Euro)

2010

2009

2008Current taxes


(217,772
)

(168,117
)

(179,461
)Deferred taxes


(447
)

8,229


(11,038
)Total income tax provision


(218,219
)

(159,888
)

(190,499
)


F-67

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

25.  INFORMATION ON THE CONSOLIDATED STATEMENT OF INCOME (Continued)

The
reconciliation between the Italian Statutory tax rate and the effective rate is shown below:

As of December 31,2010

2009

2008Italian statutory tax rate


31.4
%

31.4
%

31.4
%Aggregate effect of different tax rates in foreign jurisdictions


1.4
%

(0.3
)%

(1.7
)%Non deductible impairment loss


1.1
%




Aggregate other effects


2.1
%

3.3
%

2.7
%Effective rate


36.0
%

34.4
%

32.4
%


The
Company does not provide for an accrual for income taxes on undistributed earnings of its non-Italian operations to the related Italian parent company that are intended
to be permanently invested. It is not practicable to determine the amount of income tax liability that would result had such earnings actually been distributed. In connection with the 2010 earnings of
certain subsidiaries, the Company has provided for an accrual for income taxes related to declared dividends of earnings.

26.  COMMITMENTS AND RISKS

Licensing agreements

The Group has entered into licensing agreements with certain designers for the production, design and distribution of sunglasses and prescription frames.

Under
these licensing agreementswhich typically have terms ranging from 3 to 10 yearsthe Group is required to pay a royalty generally ranging from
5 percent to 14 percent of net sales. Certain contracts also provide for the payment of minimum annual guaranteed amounts and a mandatory marketing contribution (the latter typically
amounts to between 5 percent and 10 percent of net sales). These agreements can typically be terminated early by either party for a variety of reasons, including but not limited to
non-payment of royalties, failure to reach minimum sales thresholds, product alternation and, under certain conditions, a change in control of Luxottica Group S.p.A.

On
March 31, 2010, Luxottica Group announced a three-year renewal of its exclusive license agreement with Jones Apparel Group for the design, production and worldwide
distribution of prescription frames and sunglasses under the Anne Klein New York brand. The new agreement extends the license through December 2012 with an option for further renewal. The terms and
conditions of this agreement are in line with the prior agreement.

On
March 31, 2010, Luxottica Group announced a five-year extension of the license agreement for the design, production and worldwide distribution of prescription
frames and sunglasses under the Brooks Brothers brand. The new agreement runs through December 2014 with an option for a further five-year extension under the same terms. The terms and
conditions of this Agreement are in line with the prior agreement.

On
May 27, 2010, Luxottica Group announced a ten-year extension of the license agreement for the design, production and worldwide distribution of prescription frames
and sunglasses under the Bvlgari brand. The new agreement runs from January 1, 2011 through December 31, 2020.

F-68

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Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

26.  COMMITMENTS AND RISKS (Continued)

On
October 5, 2010, Luxottica Group announced the signing of a license agreement for the design, manufacturing and global distribution of sun and prescription eyewear under the
Coach, Coach Poppy and Reed Krakoff brands beginning January 1, 2012. Such agreement includes renewal options.

Minimum
payments required in each of the years subsequent to December 31, 2010 are detailed as follows (Amounts in thousands of Euro):

Years ending December 31:2011


69,9382012


64,2052013


56,9242014


43,3482015


35,969Subsequent years


122,028Total


392,412


Rentals, leasing and licenses

The Group leases through its worldwide subsidiaries various retail stores, plants, warehouses and office facilities as well as certain of its data processing and
automotive equipment under operating lease arrangements. These agreements expire between 2011 and 2025 and provide for renewal options under various conditions. The lease arrangements for the Group's
U.S. retail locations often include escalation clauses and provisions requiring the payment of incremental rentals, in addition to any established minimums contingent upon the achievement of specified
levels of sales volume. The Group also operates departments in various host stores, paying occupancy costs solely as a percentage of sales. Certain agreements which provide for operations of
departments in a major retail chain in the United States contain short-term cancellation clauses.

Total
rental expense for each year ended December 31 is as follows:

(Amounts in thousands of Euro)

2010

2009

2008Minimum lease payments


254,958


290,795


288,743Additional lease payments


66,898


57,700


55,464Sublease payments


(26,611
)

(28,517
)

(26,017
)Total


295,245


319,978


318,190


F-69

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Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

26.  COMMITMENTS AND RISKS (Continued)

Future
rental commitments are as follows:

Years ending December 31:(Amounts in thousands of Euro)2011


270,2312012


236,5742013


200,4212014


171,9402015


136,946Subsequent years


268,877Total


1,284,989


Other commitments

The Group is committed to pay amounts in future periods for endorsement contracts, supplier purchase and other long-term commitments. Endorsement
contracts are entered into with selected athletes and others who endorse Oakley products. Oakley is often required to pay specified minimal annual commitments and, in certain cases, additional amounts
based on performance goals. Certain contracts provide additional incentives based on the achievement of specified goals. Supplier commitments have been entered into with various suppliers in the
normal course of business. Other commitments mainly include auto, machinery and equipment lease commitments as well as commitments to open additional Sunglass Hut points of sale in Macy's department
stores in the U.S. subsequent to an agreement entered into with Macy's Inc. on December 4, 2009. As of December 31, 2010, the Group operated approximately 470 Sunglass Hut
departments in Macy's.

Future
minimum amounts to be paid for endorsement contracts and supplier purchase commitments at December 31, 2010 are as follows:

Years ending December 31:(Amounts in thousands of Euro)

Endorsement
contracts

Supply
commitments

Other
commitments2011


7,266


1,637


14,6512012


1,936





5,3392013








1,3732014








362Subsequent years








234Total


9,202


1,637


21,959


Guarantees

The United States Shoe Corporation, a wholly owned subsidiary within the Group, has guaranteed the lease payments for six stores in the United Kingdom. These
lease agreements have varying
termination dates through June 30, 2017. At December 31, 2010, the Group's maximum liability amounted to Euro 4.0 million (Euro 4.7 million at December 31,
2009).

F-70

---





Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

26. COMMITMENTS AND RISKS (Continued)

A
wholly-owned U.S. subsidiary guaranteed future minimum lease payments for lease agreements on certain stores. The lease agreements were signed directly by the franchisees as part of
certain franchising agreements. Total minimum guaranteed payments under this guarantee were Euro 1.5 million (U.S. $2.0 million) at December 31, 2010
(Euro 3.8 million at December 31, 2009). The commitments provided for by the guarantee arise if the franchisee cannot honor its financial commitments under the lease agreements. A
liability has been accrued using an expected present value calculation. Such amount is immaterial to the consolidated financial statements as of December 31, 2010 and 2009.

Credit lines

As of December 31, 2010 and 2009, the Group had unused short-term lines of credit of approximately Euro 559.8 million and
Euro 542.8 million, respectively.

The
Company and its wholly-owned Italian subsidiary Luxottica S.r.l. maintain unsecured lines of credit with primary banks for an aggregate maximum credit of
Euro 327.8 million. These lines of credit are renewable annually, can be cancelled at short notice and have no commitment fees. At December 31, 2010, these credit lines were
utilized for Euro 0.6 million.

US
Holdings maintains unsecured lines of credit with three separate banks for an aggregate maximum credit of Euro 97.4 million (U.S. $130.2 million). These lines of
credit are renewable annually, can be cancelled at short notice and have no commitment fees. At December 31, 2010, they were not used and there were Euro 34.0 million in aggregate
face amount of standby letters of credit outstanding under these lines of credit (see below).

The
blended average interest rate on these lines of credit is approximately LIBOR plus 0.40 percent.

Outstanding standby letters of credit

A U.S. subsidiary has obtained various standby letters of credit from banks for an aggregate amount of Euro 34.0 million and
Euro 29.9 million, as of December 31, 2010 and 2009, respectively. Most of these letters of credit are used for security in risk management contracts, purchases from foreign
vendors or as security on store leases. Most standby letters of credit contain evergreen clauses under which the letter is automatically renewed unless the bank is notified not to renew. Trade letters
of credit are for purchases from foreign vendors and are generally outstanding for a period that is less than six months. Substantially all the fees associated with maintaining the letters of credit
fall within the range of 40 to 60 basis points annually.

Litigation

The Group and its subsidiaries are involved in the following legal and regulatory proceedings of which, unless already settled or otherwise concluded, the timing
and outcomes are inherently uncertain, and such outcomes could have a material adverse effect on the Group's business, financial position or operating results.

F-71

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Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

26. COMMITMENTS AND RISKS (Continued)

Cole Consumer Class Action Lawsuit

In June 2006, Cole and its subsidiaries were sued by a consumer in a class action that alleged various statutory violations related to the operations of Pearle
Vision, Inc. and Pearle Vision Care, Inc. in California. The plaintiff asserted various claims relating to the confidentiality of medical information and the operation of Pearle Vision
stores in California, including violations of California laws governing relationships among opticians, optical retailers, manufacturers of frames and lenses, and optometrists, and other unlawful or
unfair business practices. The parties entered into a settlement agreement, which provided for a store voucher at Pearle Vision or LensCrafters for each class member and the payment of attorneys' fees
and costs. On December 19, 2008, the court granted final approval of the settlement and entered final judgment. The settlement became final on March 17, 2009. The effect of this
settlement on the Group's future operations and cash flow is not material.

Amounts
paid to settle this litigation and related costs incurred for the years ended December 31, 2010, 2009 and 2008, were not material.

Oakley Stockholder Lawsuit

On June 26, 2007, the Pipefitters Local No. 636 Defined Benefit Plan filed a class action complaint, on behalf of itself and all other stockholders
of Oakley, Inc. ("Oakley"), against Oakley and its Board of Directors in California Superior Court, County of Orange. The complaint alleged, among other things, that the defendants violated
their fiduciary duties to stockholders by approving Oakley's merger with Luxottica and claimed that the price per share fixed by the merger agreement was inadequate and unfair. The defendants filed
demurrers to the complaint, which the Court granted without prejudice. On September 14, 2007, the plaintiff filed an amended complaint containing the same allegations as the initial complaint
and adding purported claims for breach of the duty of candor. Because the Group believed the allegations were without merit, on October 9, 2007, the defendants filed a demurrer to the amended
complaint. Rather than respond to that demurrer, the plaintiff admitted that its claims were moot and on January 4, 2008 filed a motion for attorneys' fees and expenses. The hearing for this
motion took place on April 17, 2008. On May 29, 2008, the Court issued a ruling denying the plaintiff's motion for attorneys' fees and expenses in its entirety. The court did not rule on
the defendants' demurrer to the amended complaint. On July 11, 2008, the Court entered an order dismissing the action with prejudice and denying the plaintiff's motion for attorneys' fees and
expenses. The plaintiff appealed the Court's May 29, 2008 ruling and the July 11,
2008 order. On January 11, 2010, the appellate court affirmed the trial court's decision in all respects. The plaintiff filed a petition with the California Supreme Court requesting review of
the appellate court's decision. The Supreme Court denied the plaintiff's petition for review. Therefore, the appellate court's decision affirming the denial of the plaintiff's request for attorneys'
fees and expenses is now final for all purposes. The Group considers this matter closed.

Costs
associated with this litigation incurred for the years ended December 31, 2010, 2009 and 2008, were not material.

Fair Credit Reporting Act Litigation

In January 2007, a complaint was filed against Oakley and certain of its subsidiaries in the United States District Court for the Central District of California,
alleging willful violations of the Fair and Accurate Credit Transactions Act related to the inclusion of credit card expiration dates on sales receipts. The

F-72

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

26. COMMITMENTS AND RISKS (Continued)

plaintiff
brought suit on behalf of a class of Oakley's customers. Oakley denied any liability, and later entered into a settlement arrangement with the plaintiff that resulted in a complete release
in favor of the Oakley defendants, with no cash payment to the class members but rather an agreement by Oakley to issue vouchers for the purchase of products at Oakley retail stores during a limited
period of time. The settlement also provided for the payment of attorneys' fees and claim administration costs by the Oakley defendants. An order approving this settlement was entered on
November 24, 2008. The settlement became final on January 15, 2009. The effect of this settlement on the Group's future operations and cash flow is not material.

Amounts
paid to settle this litigation and related costs incurred for the years ended December 31, 2010, 2009 and 2008, were not material.

Texas LensCrafters Class Action Lawsuit

In May 2008, two individual optometrists commenced an action against LensCrafters, Inc. (now Luxottica Retail North America, Inc.) and Luxottica
Group S.p.A. in the United States District Court for the Eastern District of Texas, alleging violations of the Texas Optometry Act ("TOA") and the Texas Deceptive Trade Practices Act, and
tortious interference with customer relations. The suit alleged that LensCrafters attempted to control the optometrists' professional judgment and that certain terms of the optometrists'
sub-lease agreements with LensCrafters violated the TOA.
The suit sought recovery of a civil penalty of up to U.S. $1,000 for each day of a violation of the TOA, injunctive relief, punitive damages, and attorneys' fees and costs. In August 2008, plaintiffs
filed a first amended complaint, adding claims for fraudulent inducement and breach of contract. In October 2008, plaintiffs filed a second amended complaint seeking to certify the case as a class
action on behalf of all current and former LensCrafters' sub-lease optometrists. Luxottica Group S.p.A. filed a motion to dismiss for lack of personal jurisdiction in October 2008.
The court did not address that motion. The case was transferred to the Western District of Texas, Austin Division, in January 2009, pursuant to the defendants' motion to transfer venue. On
January 11, 2010, plaintiffs filed a motion requesting that the court permit the case to proceed as a class action on behalf of all optometrists who sublease from LensCrafters in Texas.

On
February 8, 2010, the parties reached an agreement to settle the litigation on confidential terms. On March 8, 2010, the court dismissed the case with prejudice. The
effect of this settlement on the Group's future operations and cash flow is not material.

Costs
associated with the litigation for the years ended December 31, 2010, 2009 and 2008, were not material.

French Competition Authority Investigation

Our French subsidiary Luxottica France S.A.S., together with other major competitors in the French eyewear industry, has been the subject of an
anti-competition investigation conducted by the French Competition Authority relating to pricing practices in such industry. The investigation has concluded and, to date, no formal action
has yet been taken by the French Competition Authority. As a consequence, it is not possible to estimate or provide a range of potential liability that may be involved in this matter. The outcome of
any such action, which the Group intends to vigorously defend, is inherently uncertain, and there can be no assurance that such action, if adversely determined, will not have a material adverse effect
on our business, results of operations and financial condition.

F-73

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

26. COMMITMENTS AND RISKS (Continued)

Other proceedings

The Group is a defendant in various other lawsuits arising in the ordinary course of business. It is the opinion of the management of the Group that it has
meritorious defenses against all such outstanding claims, which the Group will vigorously pursue, and that the outcome of such claims, individually or in the aggregate, will not have a material
adverse effect on the Group's consolidated financial position or results of operations.

27. RELATED PARTY TRANSACTIONS

Licensing agreements

The Group executed an exclusive worldwide license for the production and distribution of Brooks Brothers brand eyewear. The brand is held by Retail Brand
Alliance, Inc. ("RBA"), which is owned and controlled by a director of the Company, Claudio Del Vecchio. The original license expired in 2009 and was renewed for an additional five years on
March 31, 2010. The Group paid royalties under the license to RBA of Euro 0.8 million, Euro 0.3 million and Euro 0.8 million in 2010, 2009 and 2008,
respectively.

Incentive Stock Option Plans

On September 14, 2004, the Company announced that its primary stockholder, Leonardo Del Vecchio, had allocated 2.11 percent of the shares of the Company,
equal to 9.6 million shares,
owned by him through the company La Leonardo Finanziaria S.r.l. and currently owned through Delfin S.à r.l., a financial company owned by the Del Vecchio family, to a
stock option plan for the senior management of the Company. The options became exercisable on June 30, 2006 following the meeting of certain economic objectives and, as such, the holders of
these options became entitled to exercise such options beginning on that date until their termination in 2014. During 2010, 1.2 million options from this grant were exercised. As of
December 31, 2010, 8.1 million options were outstanding.

A
summary of related party transactions as of December 31, 2010, 2009 and 2008 is provided below.

Consolidated Statement
of Income

Consolidated Statement
of Financial PositionRelated Parties
As of December 31, 2010(Amounts in thousands of Euro)Revenues

Costs

Assets

LiabilitiesRetail Brand Alliance, Inc.


112


731





59Multiopticas Group


9,161


148


2,434


2,510Eyebiz Laboratories Pty Limited





33,941


616


14,054Others


275


801


269


Total


9,548


35,621


3,319


16,623


F-74

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

27. RELATED PARTY TRANSACTIONS (Continued)



Consolidated Statement
of Income

Consolidated Statement
of Financial PositionRelated Parties
As of December 31, 2009(Amounts in thousands of Euro)Revenues

Costs

Assets

LiabilitiesRetail Brand Alliance, Inc.


122


965





432Multiopticas Group


5,358





2,469


Others


8


576


16


Total


5,488


1,541


2,485


432




Consolidated Statement
of Income

Consolidated Statement
of Financial PositionRelated Parties
As of December 31, 2008(Amounts in thousands of Euro)Revenues

Costs

Assets

LiabilitiesRetail Brand Alliance, Inc.


129


1,198


10


68Partimmo S.r.L.





93





Cav. Leonardo Del Vecchio


120





8


Optika Holdings Limited


3,224





1,764


Roberto Chemello





5,140





2,570Others


529


613


1,838


872Total


4,002


7,044


3,620


3,510


Total
remuneration due to key managers amounted to approximately Euro 29.0 million, Euro 27.6 million and Euro 16.5 million in 2010, 2009 and
2008, respectively.

These
costs related to key managers who were already with the Group in 2008 and 2009 and remain in service, as well as those who became key managers in 2010.

28. EARNINGS PER SHARE

Basic and diluted earnings per share were calculated as the ratio of net income attributable to the stockholders of the Company for 2010, 2009 and 2008, respectively, amounting to
Euro 402,187 thousand, Euro 299,122 thousand and Euro 390,167 thousand, to the number of outstanding sharesbasic and dilutive of the Company.

Earnings
per share in 2010 were equal to Euro 0.88 compared to Euro 0.65 and Euro 0.85 in 2009 and 2008, respectively. Diluted earnings in 2010 were equal to
Euro 0.87 compared to Euro 0.65 and Euro 0.85 in 2009 and 2008, respectively.

F-75

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

28. EARNINGS PER SHARE (Continued)

The
table reported below provides the reconciliation between the average weighted number of shares utilized to calculate basic and diluted earnings per share:

2010

2009

2008Weighted average shares outstandingbasic


458,711,441


457,270,491


456,563,502Effect of dilutive stock options


1,823,956


667,311


1,280,778Weighted average shares outstandingdilutive


460,535,397


457,937,802


457,844,280Options not included in calculation of dilutive shares as the exercise price was greater than the average price during
the respective period or performance measures related to the awards have not yet been met


11,497,532


17,827,564


19,192,094


29. ATYPICAL AND/OR UNUSUAL OPERATIONS

There were no atypical and/or unusual transactions in 2010, 2009 and 2008.

30. DERIVATIVE FINANCIAL INSTRUMENTS

Derivatives are classified as current or non-current assets and liabilities. The fair value of derivatives is classified as a long-term asset or liability for the
portion of cash flows expiring after 12 months, and as a current asset or liability for the portion expiring within 12 months.

The
ineffective portion recorded in the consolidated statement of income amounted to Euro 47.4 thousand, Euro 482.4 thousand and
Euro 857.3 thousand in 2010, 2009 and 2008, respectively.

The
table below shows the assets and liabilities related to derivative contracts in effect as of December 31, 2010 and 2009 (amounts in thousands of Euro):

2010

2009Assets

Liabilities

Assets

LiabilitiesInterest rate swapscash flow hedge





(53,865
)




(48,632
)Forward contractscash flow hedge


1,484


(4,311
)Total


1,484


58,176





(48,632
)of which:Non-current portionInterest rate swapscash flow hedge





(52,964
)




(48,632
)Forward contractscash flow hedgeTotal





(52,964
)




(48,632
)Current portion


1,484


(5,212
)







F-76

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Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

30. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

The
table below shows movements in the stockholders' equity due to the reserve for cash flow hedges (amounts in thousands of Euro):

Balance as of January 1, 2008


353Fair value adjustment of derivatives designated as cash flow hedges


(61,991
)Tax effect on fair value adjustment of derivatives designated as cash flow hedges


20,718Amounts reclassfied to the consolidated statement of income


226Tax effect on amounts reclassified to the consolidated statement of income


(240
)Balance as of January 1, 2009


(40,934
)Fair value adjustment of derivatives designated as cash flow hedges


(14,809
)Tax effect on fair value adjustment of derivatives designated as cash flow hedges


5,325Amounts reclassfied to the consolidated statement of income


29,464Tax effect on amounts reclassified to the consolidated statement of income


(9,551
)Balance as of December 31, 2009


(30,505
)Fair value adjustment of derivatives designated as cash flow hedges


(45,034
)Tax effect on fair value adjustment of derivatives designated as cash flow hedges


15,126Amounts reclassfied to the consolidated statement of income


41,474Tax effect on amounts reclassified to the consolidated statement of income


(14,789
)Balance as of December 31, 2010


(33,728
)


Interest rate swaps

The notional amount of the existing interest rate swap instruments still effective as of December 31, 2010 is reported in the
following table:

Notional amount

Currency1,525,000,000

USD250,000,000

Euro


31. SHARE-BASED PAYMENTS

Beginning in April 1998, certain officers and other key employees of the Company and its subsidiaries were granted stock options of Luxottica Group S.p.A. under the Company's
stock option plans (the "plans"). In order to strengthen the loyalty of some key employeeswith respect to individual targets, and in order to enhance the overall capitalization of the
Companythe Company's stockholders meetings approved three stock capital increases on March 10, 1998, September 20, 2001 and June 14, 2006, respectively, through the
issuance of new common shares to be offered for subscription to employees. On the basis of these stock capital increases, the authorized share capital was equal to Euro 29,537,918.57. These
options become exercisable in either three equal annual installments, two equal annual installments in the second and third years of the three-year vesting period or 100 percent
vesting on the third anniversary of the date of grant. Certain options may contain accelerated vesting terms if there is a change in ownership (as defined in the plans).

F-77

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Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

31. SHARE-BASED PAYMENTS (Continued)

The
stockholders' meeting has delegated the Board of Directors to effectively execute, in one or more installments, the stock capital increases and to grant options to employees. The
Board can also:



Upon
execution of the proxy received from the Stockholders' meeting, the Board of Directors has granted a total of 51,794,300 options of which, as of December 31, 2010, 15,577,210
have been exercised.

On
April 29 2010, the Board of Directors granted 703,500 options to employees domiciled in the United States with a fair value of Euro 5.41 per option as well as 1,221,000
options to employees domiciled outside the United States with a fair value of Euro 5.59.

On
May 7, 2009, the Board of Directors authorized the reassignment of new options to employees who were then beneficiaries of the Company's 2006 and 2007 ordinary plans and the
Company's 2006 performance plan, which, considering market conditions and the financial crisis, had an exercise price that was undermining the performance incentives that typically form the foundation
of these plans. The new options' exercise price was consistent with the market values of Luxottica shares being equal to the greater of the stock price on the grant date of the new options or the
previous 30-day average. In connection with the reassignment of options related to the Company's 2006 and 2007 ordinary plans, the employees who surrendered their options received the
right to purchase the same number of Luxottica Group ordinary shares that were subject to the options he or she previously held for a total amount of 2,885,000 options. For the new options assigned to
the U.S. citizen beneficiaries of the 2006 and 2007 plans, the Company recognized an incremental fair value per share of Euro 2.16 and Euro 2.20, respectively. For the new options
assigned to the non U.S. citizen beneficiaries of the 2006 and 2007 plans, the Company recognized an incremental fair value per share of Euro 2.68 and Euro 2.77, respectively.

In
connection with the reassignment of options related to the Company's 2006 performance plan, the employees who surrendered their options received the right to purchase the same number
of Luxottica Group ordinary shares that were subject to the options he or she previously held pursuant to the above-mentioned grant, reduced by 50 percent, for a total amount of 5,700,000 options.

F-78

---





Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

31.  SHARE-BASED PAYMENTS (Continued)

In
total, the Board of Directors approved the following stock option plans:

Plan

Granted

Exercised1998 ordinary plan


3,380,400


2,716,6001999 ordinary plan


3,679,200


3,036,8002000 ordinary plan


2,142,200


1,852,5332001 ordinary plan


2,079,300


1,849,0002002 ordinary plan


2,348,400


1,957,1002003 ordinary plan


2,397,300


1,711,1002004 ordinary plan


2,035,500


1,148,5772005 ordinary plan


1,512,000


445,5002006 ordinary plan(*)


1,725,000


2007 ordinary plan(*)


1,745,000


2008 ordinary plan


2,020,500


2009 ordinary plan


1,050,000


2009 ordinary plan: reassignment of options granted under the 2006 and 2007 ordinary plans to non-U.S.
beneficiaries


2,060,000


2009 ordinary plan: reassignment of options granted under the 2006 and 2007 ordinary plans to U.S.
beneficiaries


825,000


2010 ordinary plan


1,924,500


2001 Performance Plan


1,170,000


2004 Performance Plan


1,000,000


860,0002006 Performance PlanU.S. beneficiaries(*)


3,500,000


2006 Performance Plannon-U.S. beneficiaries(*)


9,500,000


2009 Performance plan: reassignment of options granted under the 2006 performance plans to non-U.S. domiciled
beneficiaries


4,250,000


2009 Performance plan: reassignment of options granted under the 2006 performance plans to U.S. domiciled
beneficiaries


1,450,000


Total


51,794,300


15,577,210


(*)The
plan was reassigned in 2009.


On
May 13, 2008, a Performance Shares Plan for senior managers within the Company as identified by the Board of Directors of the Company (the "Board") (the "2008
PSP") was adopted. The beneficiaries of the 2008 PSP are granted the right to receive ordinary shares, without consideration, at the end of the three-year vesting period, and subject to
achievement of certain Company performance targets to be determined by the Board. The 2008 PSP has a term of five years, during which time the Board may resolve to issue different grants to the 2008
PSP's beneficiaries. The 2008 PSP covers a maximum of 6,500,000 ordinary shares. Each annual grant will not exceed 2,000,000 ordinary shares.

On
May 13, 2008, the Board granted 1,003,000 rights to receive ordinary shares, which could be increased by 20 percent up to a maximum of 1,203,600 units, at the end of the
three-year vesting period and subject to the achievement at the end of the period of certain consolidated cumulative earnings per share targets related to the three-year period
from 2008 - 2010. As of December 31, 2010, the consolidated cumulative earning per share targets were not achieved and therefore the plan did not vest.

F-79

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Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

31.  SHARE-BASED PAYMENTS (Continued)

Pursuant
to the PSP plan adopted in 2008, on May 7, 2009, the Board of Directors granted certain of our key employees 1,435,000 rights to receive ordinary shares ("PSP 2009"),
which can be increased by 25 percent up to a maximum of 1,793,750 units, at the end of the three-year vesting period, and subject to the achievement at the end of the period of
certain consolidated cumulative earning per share targets related to the three-year period from 2009 - 2011. Management expects that the target will be met. As of
December 31, 2010, 181,250 units, of the 1,793,500 granted, were forfeited.

Pursuant
to the PSP plan adopted in 2008, on April 29, 2010, the Board of Directors granted certain of our key employees 692,000 rights to receive ordinary shares ("PSP 2010"),
which can be increased by 25 percent up to a maximum of 865,000 units, at the end of the three-year vesting period, and subject to the achievement at the end of the period of
certain consolidated cumulative earning per share targets related to the three-year period from 2010 - 2012. Management expects that the target will be met. As of
December 31, 2010, 12,500 units, of the 865,000 granted, were forfeited.

On
September 14, 2004, the Company announced that its majority stockholder, Mr. Leonardo Del Vecchio, had allocated shares held through La Leonardo
Finanziaria S.r.l. (subsequently merged into Delfin S.à r.l.), a holding company of the Del Vecchio family, representing at that time 9.6 million shares of the
Company's authorized and issued share capital, to a stock option plan for senior management of the Company. The stock options to be issued under the stock option plan vested upon the meeting of
certain economic objectives as of June 30, 2006. As of December 31, 2010, there were 8.1 million units still outstanding.

The
information requested by IFRS 2 on stock option plans is reported below.

The
fair value of the stock options was estimated on the grant date using the binomial model and following weighted average assumptions:

2010 Ordinary Plan
for citizens
resident in the
U.S.A.

2010 Ordinary Plan
for citizens not
resident in the
U.S.A.

PSP 2010Share price at the grant date (in Euro)


21.17


21.17


21.17Expected option life


5.48 years


5.48 years


3 yearsVolatility


30.35
%

30.35
%

Dividend yield


1.75
%

1.75
%

1.75
%Risk-free interest rate


2.26
%

2.26
%




Expected
volatilities are based on implied volatilities from traded share options on the Company's stock, historical volatility of the Company's share price and other
factors. The expected option life is based on the historical exercise experience for the Company based upon the date of grant and represents the period of time that options granted are expected to be
outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S.
Federal Treasury or European government bond yield curve, as appropriate, in effect at the time of grant.

The
weighted average fair value of the stock options under plans granted in 2010 was Euro 5.52. The fair value of the 2010 PSP was Euro 20.10.

F-80

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

31.  SHARE-BASED PAYMENTS (Continued)

Movements
reported in the various stock option plans in 2010 are reported below:

Exercise
price

Currency

No. of options
outstanding as of
December 31, 2009

Granted
options

Forfeited
options

Exercised
options

Expired
options

No. of options
outstanding as of
December 31, 20102001 Ordinary Plan


15.20

USD


168,900





(4,500
)

(164,400
)




2002 Ordinary Plan


17.80

USD


603,250





(19,000
)

(482,350
)




101,9002003 Ordinary Plan


10.51

Euro


732,400





(15,000
)

(221,200
)




496,2002004 Ordinary Plan


13.79

Euro


1,208,600








(368,877
)




839,7232004 Performance Plan


18.59

USD


375,000








(235,000
)




140,0002005 Ordinary Plan


16.89

Euro


1,132,500





(18,000
)

(219,000
)




895,5002006 Ordinary Plan


22.19

Euro


170,000





(30,000
)







140,0002006 Performance Plan B


20.99

Euro


1,100,000














1,100,0002007 Ordinary Plan


24.03

Euro


120,000





(35,000
)







85,0002008 Ordinary Plan


18.08

Euro


1,948,000





(222,500
)







1,725,5002009 Ordinary plan for citizens not resident in the U.S.A.


13.45

Euro


378,000





(26,000
)







352,0002009 Ordinary plan for citizens resident in the U.S.A.


14.99

Euro


652,000





(83,000
)







569,0002009 Planreassignment of 2006/2007 plans for citizens not resident in the U.S.A.


13.45

Euro


2,055,000





(130,000
)







1,925,0002009 Planreassignment of 2006/2007 plans for citizens resident in the U.S.A.


15.03

Euro


820,000





(95,000
)







725,0002009 Planreassignment of 2006 plans for citizens not resident in the U.S.A


13.45

Euro


4,250,000














4,250,0002009 Planreassignment of 2006 plans for citizens resident in the U.S.A


15.11

Euro


1,450,000














1,450,0002010 Ordinary Planfor citizens non resident in the U.S.A.


20.72

Euro





1,221,000


(26,000
)







1,195,0002010 Ordinary Planfor citizens resident in the U.S.A.


21.23

Euro





703,500


(43,500
)







660,000Total







17,163,650


1,924,500


(747,500
)

(1,690,827
)




16,649,823


Options exercisable on December 31, 2010 are summarized in the following table:

Number of options
exercisable as of
December 31, 20102002 Ordinary Plan


101,9002003 Ordinary Plan


496,2002004 Ordinary Plan


839,7232004 Performance Plan


140,0002005 Ordinary Plan


895,5002006 Ordinary Plan


140,0002007 Ordinary Plan


85,000Total


2,698,323


F-81

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

31.  SHARE-BASED PAYMENTS (Continued)

The
remaining contractual life of plans in effect on December 31, 2010 is highlighted in the following table:

Remaining contractual
life in years2002 Ordinary Plan


0.082003 Ordinary Plan


1.082004 Ordinary Plan


2.092004 Performance Plan


1.082005 Ordinary Plan


3.092006 Ordinary Plan


4.092006 Performance Plan B


4.572007 Ordinary Plan


5.182008 Ordinary Plan


6.212009 Ordinary plan for citizens not resident in the U.S.A.


7.352009 Ordinary plan for citizens resident in the U.S.A.


7.352009 Planreassignment of 2006/2007 plans for citizens resident in the U.S.A.


6.252009 Planreassignment of 2006/2007 plans for citizens not resident in the U.S.A.


7.352009 Planreassignment of 2006 plans for citizens not resident in the U.S.A


7.352009 Planreassignment of 2006 plans for citizens resident in the U.S.A


7.452010 Ordinary Planfor citizens non resident in the U.S.A.


8.332010 Ordinary Planfor citizens resident in the U.S.A.


8.33


With
regards to the options exercised during the course of 2010, the weighted average share price of the shares in 2010 was equal to Euro 19.97.

The
Group has recorded an expense for the ordinary stock option plans of Euro 8.6 million, Euro 8.5 million and Euro 7.4 million in 2010, 2009
and 2008, respectively. For the performance plans, including the 2006 performance plans and the 2009 and 2010 PSP plans, the Group recorded an expense of Euro 24.3 million and
Euro 16.5 million in 2010 and 2009, respectively, and an income of Euro 28.9 million in 2008. No expense on the 2008 PSP was recorded in 2010, 2009 and 2008, since the
consolidated EPS targets were not met.

The
stock plans outstanding as of December 31, 2010 are conditional upon satisfying the service conditions. The 2004 and 2009 performance plans, as well as all the PSP plans, are
conditional upon satisfying service as well as performance conditions.

F-82

---





Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

32.  DIVIDENDS

During 2010, the Company distributed an aggregate dividend to its stockholders of Euro 160.6 million equal to Euro 0.35 per share. Dividends distributed to
non-controlling interests totals Euro 9.2 million.

33.  SUBSEQUENT EVENTS

On January 20, 2011, the Company closed the revolving credit line with Banca Nazionale del Lavoro totaling Euro 150 million. The original maturity of the above
credit line was July 13, 2011. As of December 31, 2010, the credit line was undrawn.

On
February 17, 2011, the Group announced that it had entered into agreements pursuant to which it will acquire two sunglass specialty retail chains totaling more than 70 stores
in Mexico for a total amount of approximately Euro 17 million.

This
transaction marks the Group's entry into the sun retail business in Mexico where the Group already has a solid presence through its Wholesale division. Over time, the stores will be
rebranded under the Sunglass Hut brand.

F-83

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

34.  RECONCILIATION FROM U.S. GAAP TO IAS/IFRS OF THE 2009 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AND THE 2009 AND 2008 CONSOLIDATED STATEMENTS OF INCOME

Reconciliation of the consolidated statement of financial position of the year ended December 31, 2009

ADJUSTMENTS(Amounts in thousands of Euro)U.S. GAAP

IFRS2

IAS2

IFRS3

IAS19

IAS39

OTHER

RECLASSIFICATIONS

IASCash and cash equivalents


380,081























380,081Accounts receivablenet


618,884























618,884Inventoriesnet


526,548





(1,886
)
















524,663Other assets


197,119





1,662


362








(778
)




198,365Deferred tax assets ST


110,910





3,206


218


(42
)

(203
)

1,545


(115,634
)

TOTAL CURRENT ASSETS


1,833,544





2,983


580


(42
)

(203
)

767


(115,634
)

1,721,993Property, plant and equipmentnet


1,148,916











(945
)

(129
)

2,130





1,149,972Goodwill


2,700,203








(11,368
)













2,688,835Intangible assetsnet


1,156,774








3,765





(7,954
)

(2,706
)




1,149,880Investments


45,677








640














46,317Other assets


153,505

















(5,914
)




147,591Deferred tax assets LT


97,437


(4,578
)




27


588


772





262,460


356,706TOTAL NON CURRENT ASSETS


5,302,512


(4,578
)




(6,935
)

(357
)

(7,312
)

(6,489
)

262,460


5,539,301TOTAL ASSETS


7,136,056


(4,578
)

2,983


(6,355
)

(399
)

(7,515
)

(5,722
)

146,826


7,261,294Bank overdrafts


148,951























148,951Current portion of long-term debt


166,279























166,279Accounts payable


434,604














(93
)

93





434,604Income taxes payable


11,204























11,204Other liabilities


499,136


133





63,343





(8,477
)







554,136deferred tax payable st


10,813




















(10,813
)

TOTAL CURRENT LIABILITIES


1,270,987


133





63,343





(8,570
)

93


(10,813
)

1,315,174Long-term debt


2,404,189














(888
)

(1,505
)




2,401,796Liability for termination indemnities


54,608











(9,743
)




(232
)




44,633Deferred tax liabilities


236,140





55


1,457


451


435


(128
)

157,638


396,048Other liabilities


309,898








31,186


5,757





3,188





350,028TOTAL NON CURRENT LIABILITIES


3,004,835





55


32,643


(3,535
)

(453
)

1,322


157,638


3,192,505Luxottica Group stockholders' equity


2,803,343


(4,711
)

2,928


(57,556
)

3,136


1,508


(11,407
)




2,737,239Non-controlling interests


56,890








(44,784
)







4,270





16,376TOTAL STOCKHOLDERS' EQUITY


2,860,233


(4,711
)

2,928


(102,341
)

3,136


1,508


(7,137
)




2,753,615TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


7,136,056


(4,578
)

2,983


(6,355
)

(399
)

(7,515
)

(5,722
)

146,826


7,261,294


F-84

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

34.  RECONCILIATION FROM U.S. GAAP TO IAS/IFRS OF THE 2009 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AND THE 2009 AND 2008 CONSOLIDATED STATEMENTS OF INCOME (Continued)

Reconciliation of the consolidated statement of income for the year ended December 31, 2009

ADJUSTMENTS

RECLASSIFICATIONS(Amounts in thousands of Euro)U.S. GAAP

IFRS2

IAS2

IFRS3

IAS19

IAS39

OTHER

IAS12

IASNET SALES


5,094,318























5,094,318COST OF SALES


1,768,436





(5,846
)
















1,762,591GROSS PROFIT


3,325,882





5,846

















3,331,727OPERATING EXPENSESSelling and advertising


2,097,756





4,019











2,587





2,104,362General and administrative


644,924


8,645





77


2,633











656,280Total


2,742,680


8,645


4,019


77


2,633





2,587





2,760,642INCOME FROM OPERATIONS


583,202


(8,645
)

1,827


(77
)

(2,633
)




(2,587
)




571,085OTHER INCOME (EXPENSE)Interest expense


(91,571
)







(2,673
)




(13,120
)




(1,768
)

(109,132
)Interest income


6,887























6,887Othernet


(4,235
)













180








(4,056
)Other expensenet


(88,919
)







(2,673
)




(12,940
)




(1,768
)

(106,301
)INCOME BEFORE PROVISION FOR INCOME TAXES


494,283


(8,645
)

1,827


(2,751
)

(2,633
)

(12,940
)

(2,587
)

(1,768
)

464,784PROVISION FOR INCOME TAXES


(167,416
)

1,713


(2,498
)

244


932


4,672


697


1,768


(159,888
)NET INCOME


326,867


(6,933
)

(671
)

(2,507
)

(1,701
)

(8,268
)

(1,889
)




304,896LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS


(12,105
)







6,330














(5,774
)NET INCOME ATTRIBUTABLE TO LUXOTTICA GROUP STOCKHOLDERS


314,762


(6,933
)

(671
)

3,824


(1,701
)

(8,268
)

(1,889
)




299,122


F-85

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

34.  RECONCILIATION FROM U.S. GAAP TO IAS/IFRS OF THE 2009 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AND THE 2009 AND 2008 CONSOLIDATED STATEMENTS OF INCOME (Continued)

Reconciliation of the consolidated statement of income for the year ended December 31, 2008

ADJUSTMENTS

RECLASSIFICATIONS(Amounts in thousands of Euro)U.S. GAAP

IFRS2

IAS2

IFRS3

IAS19

IAS39

OTHER

IAS12

IASNET SALES


5,201,611























5,201,611COST OF SALES


1,751,251





(3,490
)

868














1,748,628GROSS PROFIT


3,450,360





3,490


(868
)













3,452,983OPERATING EXPENSESSelling and advertising


2,124,430





5,177


16,776








(1,394
)




2,144,989General and administrative


576,167


(31,885
)




32,022


(265
)




315





576,355Total


2,700,597


(31,885
)

5,177


48,798


(265
)




(1,079
)




2,721,344INCOME FROM OPERATIONS


749,763


31,885


(1,687
)

(49,666
)

265





1,079





731,639OTHER INCOME (EXPENSE)Interest expense


(135,267
)







(3,223
)




16,808





(1,321
)

(123,002
)Interest income


13,265























13,265Othernet


(37,890
)

4,247











22





90


(33,531
)Other expensenet


(159,892
)

4,247





(3,223
)




16,830





(1,231
)

(143,269
)INCOME BEFORE PROVISION FOR INCOME TAXES


589,870


36,132


(1,687
)

(52,889
)

265


16,830


1,079


(1,231
)

588,371PROVISION FOR INCOME TAXES


(194,657
)

(2,594
)

(6,173
)

18,388


(339
)

(5,824
)

(531
)

1,231


(190,499
)NET INCOME


395,213


33,538


(7,860
)

(34,500
)

(74
)

11,006


548





397,872LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS


(15,492
)







7,787














(7,705
)NET INCOME ATTRIBUTABLE TO LUXOTTICA GROUP STOCKHOLDERS


379,722


33,538


(7,860
)

(26,714
)

(74
)

11,006


548





390,167


The main reconciling items between IAS/IFRS and U.S. GAAP are explained below:

IFRS 2Share-based payment(IFRS 2 vs. ASC 718) and related tax effects (IAS 12 vs ASC 740). The
differences between U.S. GAAP and IAS/IFRS relate to:



IAS 2Inventories(IAS 2 vs. ASC 330). The differences between U.S. GAAP and IAS/IFRS relate
to:



F-86

---



Notes to the
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of DECEMBER 31, 2010

34.  RECONCILIATION FROM U.S. GAAP TO IAS/IFRS OF THE 2009 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AND THE 2009 AND 2008 CONSOLIDATED STATEMENTS OF INCOME (Continued)



IFRS 3Business combinations(IFRS 3 vs. ASC 805). The main differences mainly relate
to:



IAS 19Employee Benefits(IAS 19 vs. ASC 715). Under U.S. GAAP, the time horizon to calculate expected
returns on plan assets may be based on the fair value of the assets over a period as long as five years. Under IAS/IFRS, this calculation is performed on the fair value of the assets as of the balance
sheet date. Also actuarial gains and losses are recognized in other comprehensive income and are never amortized through profit and loss, whereas under U.S. GAAP
actuarial gains and losses are recognized in other comprehensive income and amortized through profit and loss based on the corridor method.

IAS 39Financial Instruments(IAS 39 vs. ASC 835). U.S. GAAP permits the capitalization of debt issuance
costs and their amortization over the life of the loan which are presented in the consolidated statement of financial position as assets. Under IAS/IFRS, such costs are recognized on the basis of
their amortized costs, calculated on the basis of the effective interest rate and are presented in the consolidated statement of financial position as a reduction of the debt balance.

Other
adjustments relate to minor differences between U.S. GAAP and IAS/IFRS on intangible fixed assets and to income tax expense on the intercompany transfer of assets. Under
U.S. GAAP, the recognition of tax expense from intercompany transfers is deferred until the related asset is sold or disposed. Under IAS/IFRS the above income tax expense is recognized in the year
when the intercompany transfer occurs.

Reclassifications
mainly relate to the differences between IAS 12 and ASC 740 on the presentation of deferred tax assets and liabilities.

F-87

---







Luxottica Group S.p.A. and Subsidiaries

VALUATION AND QUALIFYING ACCOUNTS

ALLOWANCE FOR DOUBTFUL ACCOUNTS

(Amounts in thousands of Euro)

Balance at
beginning
of period

Charged to
costs and
expenses

Other(1)

Deductions

Balance at
end of
period2008


25,543


15,250


(386
)

(11,338
)

29,0692009


29,069


1,417


1,765


(1,314
)

30,9372010


30,937


3,701


2,460


(3,730
)

33,368




ALLOWANCE FOR INVENTORY RESERVE ACCOUNTS

(Amounts in thousands of Euro)

Balance at
beginning
of period

Charged to
costs and
expenses

Other(2)

Deductions

Balance at
end of
period2008


87,146


39,075


976


(60,157
)

65,0882009


65,088


48,857


11,745


(44,297
)

81,3932010


81,393


42,914


14,085


(41,840
)

96,552


F-88

---







Table of Contents

ITEM 19.    EXHIBITS

Exhibits.The following documents are filed as exhibits
herewith, unless otherwise specified and
incorporated herein by reference:

Exhibit
Number

Exhibits1.1

Articles of Association of Luxottica Group S.p.A. (incorporated herein by reference to Amendment No. 3 to Form F-1 (file No. 33-32039) filed with the U.S. Securities and Exchange
Commission (the "Commission") on January 23, 1990).1.2

Amended and Restated By-laws of Luxottica Group S.p.A. (Unofficial English translation filed herewith).2.1

Amended and Restated Deposit Agreement, dated as of March 28, 2006, among Luxottica Group S.p.A., Deutsche Bank Trust Company Americas, as Depositary, and all owners and holders form time to
time of American Depositary Receipts issued thereunder (incorporated herein by reference to our Registration Statement on Form F-6, as filed with the Commission on March 29, 2006).2.2

Subscription Agreement, dated June 18, 1999, from Luxottica Luxembourg S.A. and Luxottica Group S.p.A., as guarantor of the Notes, to Credit Suisse First Boston (Europe) Limited and
UniCredito Italiano S.p.A., as joint lead managers and Banca Commerciale Italiana, Banca d'Intermediazione Mobiliare IMI, Bayerische Hypo-und Vereinsbank AG, Caboto Holding SIM S.p.A., Merrill Lynch International and Paribas, as managers
(incorporated herein by reference to our Report on Form 6-K dated November 19, 1999, as filed with the Commission on November 23, 1999).2.3

Fiscal Agency Agreement, dated June 25, 1999, between Luxottica Luxembourg S.A., Luxottica Group S.p.A., Bankers Trust Company, Bankers Trust Luxembourg S.A. and Credit Suisse First
Boston (incorporated herein by reference to our Report on Form 6-K dated November 19, 1999, as filed with the Commission on November 23, 1999).4.1

Luxottica Group S.p.A. 1998 Stock Option Plan (incorporated herein by reference to our Form S-8, dated October 20, 1998, as filed with the Commission on October 23,
1998).4.2

Luxottica Group S.p.A. 2001 Stock Option Plan (incorporated herein by reference to our Form S-8 (file no. 333-14006), as filed with the Commission on October 15, 2001).4.3

Form of Note Purchase Agreement, dated as of September 3, 2003, by and between Luxottica U.S. Holdings Corp. and each of the Purchasers listed in Schedule A attached thereto (incorporated
herein by reference to our Report on Form 6-K, as filed with the Commission on September 30, 2003).4.4

Form of Parent Guarantee, dated as of September 3, 2003, granted by Luxottica Group S.p.A. (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on
September 30, 2003).4.5

Form of Subsidiary Guarantee, dated as of September 3, 2003, granted by Luxottica S.r.l. (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on
September 30, 2003).


118

---



Table of Contents

Exhibit
Number

Exhibits4.6

Amended and Restated Facilities Agreement, dated June 3, 2004, for Luxottica Group S.p.A. and Luxottica U.S. Holdings Corp. arranged by ABN AMRO Bank N.V., Banca Intesa S.p.A., Banc of
America Securities Limited, Citigroup Global Markets Limited, HSBC Bank plc, MediobancaBanca di Credito Finanziario S.p.A., The Royal Bank of Scotland plc, Calyon S.A., Succursale di Milano, Calyon New York Branch,
Capitalia S.p.A. and UniCredit Banca Mobiliare S.p.A. with UniCredito Italiano S.p.A., New York branch, and Unicredit Banca d'Impresa S.p.A., acting as Agents (incorporated herein by reference to our annual report on
Form 20-F for the year ended December 31, 2005, as filed with the Commission on June 28, 2006).4.7

Amendment Agreement, dated March 10, 2006, for Luxottica Group S.p.A. and Luxottica U.S. Holdings Corp. arranged by ABN AMRO Bank N.V., Banca Intesa S.p.A., Banc of America
Securities Limited, Citigroup Global Markets Limited, HSBC Bank plc, MediobancaBanca di Credito Finanziario S.p.A., The Royal Bank of Scotland plc, Calyon S.A., Succursale di Milano, Calyon New York Branch,
Capitalia S.p.A. and UniCredit Banca Mobiliare S.p.A. with UniCredito Italiano S.p.A., New York branch, and Unicredit Banca d'Impresa S.p.A., acting as Agents (incorporated herein by reference to our annual report on
Form 20-F for the year ended December 31, 2005, as filed with the Commission on June 28, 2006).4.8

Amendment No. 2 to Agreement and Plan of Merger, dated as of July 14, 2004, by and between Luxottica Group S.p.A., Colorado Acquisition Corp. and Cole National Corporation (incorporated
herein by reference to our report on Form 6-K, dated July 14, 2004, as filed with the Commission on July 16, 2004).4.9

Luxottica Group S.p.A. 2006 Stock Option Plan (incorporated herein by reference to our Annual Report on Form 20-F for the year ended December 31, 2005, as filed with the Commission on
June 28, 2006).4.10

Agreement and Plan of Merger, dated as of June 20, 2007, by and among Luxottica Group S.p.A., Norma Acquisition Corp. and Oakley, Inc. (incorporated herein by reference to our Report on
Form 6-K, as filed with the Commission on June 25, 2007).4.11

Non-Competition Agreement, dated as of June 20, 2007, by and among Luxottica Group S.p.A., Norma Acquisition Corp., Oakley, Inc. and Jim Jannard (incorporated herein by reference to our
Report on Form 6-K, as filed with the Commission on June 25, 2007).4.12

Term Facility Agreement, dated October 12, 2007, among Luxottica Group S.p.A. and Luxottica U.S. Holdings Corp., as borrowers, Citibank N.A., New York / Citibank N.A., Milan Branch, Intesa
Sanpaolo S.p.A., Bayerische Hypo- und Vereinsbank AG, Milan Branch (part of UniCredit Markets and Investment Banking) / Bayerische Hypo- und Vereinsbank AG, New York Branch (part of UniCredit Markets and Investment Banking) and The Royal Bank of
Scotland plc, as Underwriters, Citigroup Global Markets Limited, Intesa Sanpaolo S.p.A., Bayerische Hypo- und Vereinsbank AG, Milan Branch (part of UniCredit Markets and Investment Banking) and The Royal Bank of Scotland plc, as
Bookrunners, and Bayerische Hypo- und Vereinsbank AG, New York Branch (part of UniCredit Markets and Investment Banking), as Agent (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on November 8,
2007).


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Exhibit
Number

Exhibits4.13

Bridge Facility Agreement, dated October 12, 2007, among Luxottica U.S. Holdings Corp. as borrower, Banc of America Securities Limited and Bayerische Hypo- und Vereinsbank AG, Milan Branch (part of
UniCredit Markets and Investment Banking) as Arrangers, Bank of America, N.A. and Bayerische Hypo- und Vereinsbank AG, New York Branch (part of UniCredit Markets and Investment Banking), as Underwriters and Lenders and Banc of America Securities
Limited, as Agent (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on November 8, 2007).4.14

Amendment and Transfer Agreement, dated April 29, 2008, among Luxottica U.S. Holdings Corp., as borrower, Luxottica Group S.p.A., as the company, Luxottica Group S.p.A. and
Luxottica S.r.l., as original guarantors, Banc of America Securities Limited and Bayerische Hypo- und Vereinsbank AG, Milan Branch (part of UniCredit Markets and Investment Banking), as exclusive bookrunners and arrangers, Bank of America, N.A.
and Bayerische Hypo- und Vereinsbank AG, New York Branch (part of UniCredit Markets and Investment Banking), as underwriters, Bank of America N.A. and Unicredito Italiano S.p.A.New York Branch, as new underwriters, the Existing Lenders and
the New Lenders and Banc of America Securities Limited, as agent (incorporated herein by reference to our annual report on Form 20-F for the year ended December 31, 2007, as filed with the Commission on June 26, 2008).4.15

Luxottica Group S.p.A. 2008 Performance Shares Plan (Unofficial English translation incorporated herein by reference to our annual report on Form 20-F for the year ended December 31,
2007, as filed with the Commission on June 26, 2008).4.16

Revolving Credit Facility Agreement, dated May 29, 2008, by and among Luxottica Group S.p.A, as borrower, Luxottica U.S. Holdings Corp., as guarantor, Intesa Sanpaolo S.p.A., as agent, and
Intesa Sanpaolo S.p.A., Banca Popolare di Vicenza S.c.p.A. and Banca Antonveneta S.p.A., as lenders (English language summary incorporated herein by reference to our annual report on Form 20-F for the year ended December 31, 2007,
as filed with the Commission on June 26, 2008).4.17

Form of Note Purchase Agreement, dated as of June 30, 2008, by and between Luxottica U.S. Holdings Corp. and each of the Purchasers listed in Schedule A attached thereto (incorporated herein
by reference to our Report on Form 6-K, as filed with the Commission on July 11, 2008).4.18

Form of Parent Guarantee, dated as of July 1, 2008, granted by Luxottica Group S.p.A. (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on
July 11, 2008).4.19

Form of Subsidiary Guarantee, dated as of July 1, 2008, granted by Luxottica S.r.l. (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on
July 11, 2008).4.20

Euro 300,000,000 Term Facility Agreement, dated November 11, 2009, between Luxottica Group S.p.A. as Borrower, Luxottica U.S. Holdings Corp. and Luxottica S.r.l. as Original
Guarantors, Calyon S.A., Milan Branch, Deutsche Bank S.p.A., MediobancaBanca di Credito Finanziario S.p.A., UniCredit Corporate Banking S.p.A. as Mandated Lead Arrangers, Bookrunners and Original Lenders and
MediobancaBanca di Credito Finanziario S.p.A. as Agent (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on November 19, 2009).


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Exhibit
Number

Exhibits4.21

Amendment Agreement, dated November 27, 2009, for Luxottica U.S. Holdings Corp., as Borrower, arranged by Banc of America Securities Limited, acting as Agent, relating to the Bridge Facility Agreement,
 dated October 12, 2007, as amended on April 29, 2008 (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on January 4, 2010).4.22

Form of Note Purchase Agreement, dated as of January 29, 2010, by and between Luxottica U.S. Holdings Corp. and each of the Purchasers listed in Schedule A attached thereto (incorporated
herein by reference to our Report on Form 6-K, as filed with the Commission on February 11, 2010).4.23

Form of Parent Guarantee, dated as of January 29, 2009, granted by Luxottica Group S.p.A. (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on
February 11, 2010).4.24

Form of Subsidiary Guarantee, dated as of January 29, 2010, granted by Luxottica S.r.l. (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on
February 11, 2010).4.25

Note Purchase Agreement, dated as of September 30, 2010, by and between Luxottica Group S.p.A., and each of the Purchasers listed in Schedule A attached thereto (incorporated herein by
reference to our Report on Form 6-K, as filed with the Commission on November 1, 2010).4.26

Subsidiary Guarantee, dated as of September 30, 2010, granted by Luxottica S.r.l. and Luxottica U.S. Holdings Corp (incorporated herein by reference to our Report on Form 6-K, as filed
with the Commission on November 1, 2010).4.27

Subscription Agreement, dated November 9, 2010, by and among Luxottica Group S.p.A., Luxottica U.S. Holdings Corp., Luxottica S.r.l. and BNP Paribas, Banca IMI S.p.A., Deutche Bank
AG, London Branch and Mediobanca Banca di Credito Finanziario S.p.A., as Joint Lead Managers (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on November 23, 2010).4.28

Trust Deed, dated as of November 10, 2010, by and among Luxottica Group S.p.A., as Issuer, Luxottica U.S. Holdings Corp. and Luxottica S.r.l., as Original Guarantors, and BNP Paribas
Trust Corporation UK Limited, as Trustee (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on November 23, 2010).4.29

Paying Agency Agreement, dated as of November 10, 2010, by and among Luxottica Group S.p.A., as Issuer, Luxottica U.S. Holdings Corp. and Luxottica S.r.l., as Guarantors, BNP Paribas
Trust Corporation UK Ltd, as Trustee, and BNP Paribas Securities Services, Luxembourg Branch, as Principal Paying Agent (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on November 23,
2010).8.1

List of Subsidiaries (filed herewith).12.1

Certificate of Principal Executive Officer Pursuant to §302 of the Sarbanes-Oxley Act of 2002 (filed herewith).12.2

Certificate of Principal Financial Officer Pursuant to §302 of the Sarbanes-Oxley Act of 2002 (filed herewith).13.1

Certificate of Principal Executive Officer Pursuant to §906 of the Sarbanes-Oxley Act of 2002 (filed herewith).


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Table of Contents

Exhibit
Number

Exhibits13.2

Certificate of Principal Financial Officer Pursuant to §906 of the Sarbanes-Oxley Act of 2002 (filed herewith).15.1

Consent of Deloitte & Touche S.p.A. (filed herewith).


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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and
authorized the undersigned to sign this annual report on its behalf.

LUXOTTICA GROUP S.p.A.
(Registrant)By:

/s/ ANDREA GUERRA Andrea Guerra
Chief Executive OfficerDated: April 28, 2011


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EXHIBIT INDEX

Exhibit
Number

Exhibits1.1

Articles of Association of Luxottica Group S.p.A. (incorporated herein by reference to Amendment No. 3 to Form F-1 (file No. 33-32039) filed with the Commission on January 23,
1990).1.2

Amended and Restated By-laws of Luxottica Group S.p.A. (Unofficial English translation filed herewith).2.1

Amended and Restated Deposit Agreement, dated as of March 28, 2006, among Luxottica Group S.p.A., Deutsche Bank Trust Company Americas, as Depositary, and all owners and holders form time to
time of American Depositary Receipts issued thereunder (incorporated herein by reference to our Registration Statement on Form F-6, as filed with the Commission on March 29, 2006).2.2

Subscription Agreement, dated June 18, 1999, from Luxottica Luxembourg S.A. and Luxottica Group S.p.A., as guarantor of the Notes, to Credit Suisse First Boston (Europe) Limited and
UniCredito Italiano S.p.A., as joint lead managers and Banca Commerciale Italiana, Banca d'Intermediazione Mobiliare IMI, Bayerische Hypo-und Vereinsbank AG, Caboto Holding SIM S.p.A., Merrill Lynch International and Paribas, as managers
(incorporated herein by reference to our Report on Form 6-K dated November 19, 1999, as filed with the Commission on November 23, 1999).2.3

Fiscal Agency Agreement, dated June 25, 1999, between Luxottica Luxembourg S.A., Luxottica Group S.p.A., Bankers Trust Company, Bankers Trust Luxembourg S.A. and Credit Suisse First
Boston (incorporated herein by reference to our Report on Form 6-K dated November 19, 1999, as filed with the Commission on November 23, 1999).4.1

Luxottica Group S.p.A. 1998 Stock Option Plan (incorporated herein by reference to our Form S-8, dated October 20, 1998, as filed with the Commission on October 23,
1998).4.2

Luxottica Group S.p.A. 2001 Stock Option Plan (incorporated herein by reference to our Form S-8 (file no. 333-14006), as filed with the Commission on October 15, 2001).4.3

Form of Note Purchase Agreement, dated as of September 3, 2003, by and between Luxottica U.S. Holdings Corp. and each of the Purchasers listed in Schedule A attached thereto (incorporated
herein by reference to our Report on Form 6-K, as filed with the Commission on September 30, 2003).4.4

Form of Parent Guarantee, dated as of September 3, 2003, granted by Luxottica Group S.p.A. (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on
September 30, 2003).4.5

Form of Subsidiary Guarantee, dated as of September 3, 2003, granted by Luxottica S.r.l. (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on
September 30, 2003).4.6

Amended and Restated Facilities Agreement, dated June 3, 2004, for Luxottica Group S.p.A. and Luxottica U.S. Holdings Corp. arranged by ABN AMRO Bank N.V., Banca Intesa S.p.A., Banc
of America Securities Limited, Citigroup Global Markets Limited, HSBC Bank plc, MediobancaBanca di Credito Finanziario S.p.A., The Royal Bank of Scotland plc, Calyon S.A., Succursale di Milano, Calyon New York Branch,
Capitalia S.p.A. and UniCredit Banca Mobiliare S.p.A. with UniCredito Italiano S.p.A., New York branch, and Unicredit Banca D'Impresa S.p.A., acting as Agents (incorporated herein by reference to our annual report on
Form 20-F for the year ended December 31, 2005, as filed with the Commission on June 28, 2006).


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Table of Contents

Exhibit
Number

Exhibits4.7

Amendment Agreement, dated March 10, 2006, for Luxottica Group S.p.A. and Luxottica U.S. Holdings Corp. arranged by ABN AMRO Bank N.V., Banca Intesa S.p.A., Banc of America Securities
Limited, Citigroup Global Markets Limited, HSBC Bank plc, MediobancaBanca di Credito Finanziario S.p.A., The Royal Bank of Scotland plc, Calyon S.A., Succursale di Milano, Calyon New York Branch, Capitalia S.p.A. and
UniCredit Banca Mobiliare S.p.A. with UniCredito Italiano S.p.A., New York branch, and Unicredit Banca D'Impresa S.p.A., acting as Agents (incorporated herein by reference to our annual report on Form 20-F for the year ended
December 31, 2005, as filed with the Commission on June 28, 2006).4.8

Amendment No. 2 to Agreement and Plan of Merger, dated as of July 14, 2004, by and between Luxottica Group S.p.A., Colorado Acquisition Corp. and Cole National Corporation (incorporated
herein by reference to our report on Form 6-K, dated July 14, 2004, as filed with the Commission on July 16, 2004).4. 9

Luxottica Group S.p.A. 2006 Stock Option Plan (incorporated herein by reference to our annual report on Form 20-F for the year ended December 31, 2005, as filed with the Commission on
June 28, 2006).4.10

Agreement and Plan of Merger, dated as of June 20, 2007, by and among Luxottica Group S.p.A., Norma Acquisition Corp. and Oakley, Inc. (incorporated herein by reference to our Report on
Form 6-K, as filed with the Commission on June 25, 2007).4.11

Non-Competition Agreement, dated as of June 20, 2007, by and among Luxottica Group S.p.A., Norma Acquisition Corp., Oakley, Inc. and Jim Jannard (incorporated herein by reference to our
Report on Form 6-K, as filed with the Commission on June 25, 2007).4.12

Term Facility Agreement, dated October 12, 2007, among Luxottica Group S.p.A. and Luxottica U.S. Holdings Corp., as borrowers, Citibank N.A., New York / Citibank N.A., Milan Branch, Intesa
Sanpaolo S.p.A., Bayerische Hypo- und Vereinsbank AG, Milan Branch (part of UniCredit Markets and Investment Banking) / Bayerische Hypo- und Vereinsbank AG, New York Branch (part of UniCredit Markets and Investment Banking) and The Royal Bank of
Scotland plc, as Underwriters, Citigroup Global Markets Limited, Intesa Sanpaolo S.p.A., Bayerische Hypo- und Vereinsbank AG, Milan Branch (part of UniCredit Markets and Investment Banking) and The Royal Bank of Scotland plc, as
Bookrunners, and Bayerische Hypo- und Vereinsbank AG, New York Branch (part of UniCredit Markets and Investment Banking), as Agent (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on November 8,
2007).4.13

Bridge Facility Agreement, dated October 12, 2007, among Luxottica U.S. Holdings Corp. as borrower, Banc of America Securities Limited and Bayerische Hypo- und Vereinsbank AG, Milan Branch (part
of UniCredit Markets and Investment Banking) as Arrangers, Bank of America, N.A. and Bayerische Hypo- und Vereinsbank AG, New York Branch (part of UniCredit Markets and Investment Banking), as Underwriters and Lenders and Banc of America Securities
Limited, as Agent (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on November 8, 2007).4.14

Amendment and Transfer Agreement, dated April 29, 2008, among Luxottica U.S. Holdings Corp., as borrower, Luxottica Group S.p.A., as the company, Luxottica Group S.p.A. and
Luxottica S.r.l., as original guarantors, Banc of America Securities Limited and Bayerische Hypo- und Vereinsbank AG, Milan Branch (part of UniCredit Markets and Investment Banking), as exclusive bookrunners and arrangers, Bank of America, N.A.
and Bayerische Hypo- und Vereinsbank AG, New York Branch (part of UniCredit Markets and Investment Banking), as underwriters, Bank of America N.A. and Unicredito Italiano S.p.A.New York Branch, as new underwriters, the Existing Lenders and
the New Lenders and Banc of America Securities Limited, as agent (incorporated herein by reference to our annual report on Form 20-F for the year ended December 31, 2007, as filed with the Commission on June 26, 2008).


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Table of Contents

Exhibit
Number

Exhibits4.15

Luxottica Group S.p.A. 2008 Performance Shares Plan (Unofficial English translation incorporated herein by reference to our annual report on Form 20-F for the year ended December 31, 2007,
as filed with the Commission on June 26, 2008).4.16

Revolving Credit Facility Agreement, dated May 29, 2008, by and among Luxottica Group S.p.A, as borrower, Luxottica U.S. Holdings Corp., as guarantor, Intesa Sanpaolo S.p.A., as agent, and
Intesa Sanpaolo S.p.A., Banca Popolare di Vicenza S.c.p.A. and Banca Antonveneta S.p.A., as lenders (English language summary incorporated herein by reference to our annual report on Form 20-F for the year ended December 31, 2007,
as filed with the Commission on June 26, 2008).4.17

Form of Note Purchase Agreement, dated as of June 30, 2008, by and between Luxottica U.S. Holdings Corp. and each of the Purchasers listed in Schedule A attached thereto (incorporated herein
by reference to our Report on Form 6-K, as filed with the Commission on July 11, 2008).4.18

Form of Parent Guarantee, dated as of July 1, 2008, granted by Luxottica Group S.p.A. (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on
July 11, 2008).4.19

Form of Subsidiary Guarantee, dated as of July 1, 2008, granted by Luxottica S.r.l. (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on
July 11, 2008).4.20

Euro 300,000,000 Term Facility Agreement, dated November 11, 2009, between Luxottica Group S.p.A. as Borrower, Luxottica U.S. Holdings Corp. and Luxottica S.r.l. as Original
Guarantors, Calyon S.A., Milan Branch, Deutsche Bank S.p.A., MediobancaBanca di Credito Finanziario S.p.A., UniCredit Corporate Banking S.p.A. as Mandated Lead Arrangers, Bookrunners and Original Lenders and
MediobancaBanca di Credito Finanziario S.p.A. as Agent (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on November 19, 2009).4.21

Amendment Agreement, dated November 27, 2009, for Luxottica U.S. Holdings Corp., as Borrower, arranged by Banc of America Securities Limited, acting as Agent, relating to the Bridge Facility
Agreement, dated October 12, 2007, as amended on April 29, 2008 (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on January 4, 2010).4.22

Form of Note Purchase Agreement, dated as of January 29, 2010, by and between Luxottica U.S. Holdings Corp. and each of the Purchasers listed in Schedule A attached thereto (incorporated
herein by reference to our Report on Form 6-K, as filed with the Commission on February 11, 2010).4.23

Form of Parent Guarantee, dated as of January 29, 2010, granted by Luxottica Group S.p.A. (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on
February 11, 2010).4.24

Form of Subsidiary Guarantee, dated as of January 29, 2010, granted by Luxottica S.r.l. (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on
February 11, 2010).4.25

Note Purchase Agreement, dated as of September 30, 2010, by and between Luxottica Group S.p.A., and each of the Purchasers listed in Schedule A attached thereto (incorporated herein by
reference to our Report on Form 6-K, as filed with the Commission on November 1, 2010).4.26

Subsidiary Guarantee, dated as of September 30, 2010, granted by Luxottica S.r.l. and Luxottica U.S. Holdings Corp (incorporated herein by reference to our Report on Form 6-K, as filed
with the Commission on November 1, 2010).


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Table of Contents

Exhibit
Number

Exhibits4.27

Subscription Agreement, dated November 9, 2010, by and among Luxottica Group S.p.A., Luxottica U.S. Holdings Corp., Luxottica S.r.l. and BNP Paribas, Banca IMI S.p.A., Deutche Bank AG,
London Branch and Mediobanca Banca di Credito Finanziario S.p.A., as Joint Lead Managers (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on November 23, 2010).4.28

Trust Deed, dated as of November 10, 2010, by and among Luxottica Group S.p.A., as Issuer, Luxottica U.S. Holdings Corp. and Luxottica S.r.l., as Original Guarantors, and BNP Paribas
Trust Corporation UK Limited, as Trustee (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on November 23, 2010).4.29

Paying Agency Agreement, dated as of November 10, 2010, by and among Luxottica Group S.p.A., as Issuer, Luxottica U.S. Holdings Corp. and Luxottica S.r.l., as Guarantors, BNP Paribas
Trust Corporation UK Ltd, as Trustee, and BNP Paribas Securities Services, Luxembourg Branch, as Principal Paying Agent (incorporated herein by reference to our Report on Form 6-K, as filed with the Commission on November 23,
2010).8.1

List of Subsidiaries (filed herewith).12.1

Certificate of Principal Executive Officer Pursuant to §302 of the Sarbanes-Oxley Act of 2002 (filed herewith).12.2

Certificate of Principal Financial Officer Pursuant to §302 of the Sarbanes-Oxley Act of 2002 (filed herewith).13.1

Certificate of Principal Executive Officer Pursuant to §906 of the Sarbanes-Oxley Act of 2002 (filed herewith).13.2

Certificate of Principal Financial Officer Pursuant to §906 of the Sarbanes-Oxley Act of 2002 (filed herewith).15.1

Consent of Deloitte & Touche S.p.A. (filed herewith).


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