Luxottica Group, S.p.A. (LUX)

Cole SEC Investigation

Following Cole’s announcement in November 2002 of the restatement of Cole’s financial statements, the Securities and Exchange Commission (“SEC”) began an investigation into Cole’s previous accounting.  The SEC subpoenaed various documents from Cole and deposed numerous former officers, directors and employees of Cole.  During the course of this investigation, the SEC staff had indicated that it intended to recommend that a civil enforcement action be commenced against certain former officers and directors of Cole but not against Cole.  Cole was obligated to advance reasonable attorneys’ fees incurred by current and former officers and directors who were involved in the SEC investigation subject to undertakings provided by such individuals.  Cole had insurance available with respect to a portion of these indemnification obligations.  In March 2006, the SEC staff indicated that it had concluded its investigation and that, contrary to its earlier indication, it would not be recommending that an enforcement action be commenced against anyone in connection with the investigation. Costs associated with the Cole SEC investigation incurred for the years ended December 31, 2004, 2005 and 2006, were approximately Euro 0.1 million, Euro 1.2 million and Euro 0.3 million, respectively.  There were no related amounts recorded as liabilities reflected in the consolidated balance sheets as of December 31, 2004 and 2005, as the liability was not reasonably estimable and probable.

Following Cole’s announcement in November 2002 of the restatement of Cole’s financial statements, the Securities and Exchange Commission (“SEC”) began an investigation into Cole’s previous accounting. The SEC subpoenaed various documents from Cole and deposed numerous former officers, Directors and employees of Cole. During the course of this investigation, the SEC staff had indicated that it intended to recommend that a civil enforcement action be commenced against certain former officers and Directors of Cole but not against Cole. Cole was obligated to advance reasonable attorneys’ fees incurred by current and former officers and Directors who were involved in the SEC investigation subject to undertakings provided by such individuals. Cole had insurance available with respect to a portion of these indemnification obligations. In March 2006, the SEC staff indicated that it had concluded its investigation and that, contrary to its earlier indication, it would not be recommending that an enforcement action be commenced against anyone in connection with the investigation. Costs associated with the Cole SEC investigation incurred for the years ended December 31, 2004, 2005 and 2006, were approximately Euro 55,000, Euro 1,225,000 and Euro 325,000, respectively. There were no related amounts recorded as liabilities reflected in the consolidated balance sheets as of December 31, 2004 and 2005, as the liability was not reasonably estimable and probable.

Cole SEC Investigation

Following Cole’s announcement in November 2002 of the restatement of its financial statements, the SEC began an investigation into Cole’s previous accounting. The SEC subpoenaed various documents from Cole and deposed numerous former officers, directors and employees of Cole. During the course of this investigation, the SEC staff had indicated that it intended to recommend that a civil enforcement action be commenced against certain officers and directors of Cole but not against Cole. Cole was obligated to advance reasonable attorneys’ fees incurred by current and former officers and directors who are involved in the SEC investigation subject to undertakings provided by such individuals. Cole has insurance available with respect to a portion of these indemnification obligations. In March 2006, the SEC staff indicated that it had concluded its investigation and that, contrary to its earlier indication, it would not be recommending that an enforcement action be commenced against anyone in connection with the investigation.

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Cole SEC Investigation

Following Cole’s announcement in November 2002 of the restatement of its financial statements, the Securities and Exchange Commission (“SEC”) began an investigation into Cole’s previous accounting.  The SEC subpoenaed various documents from Cole and deposed numerous former officers, directors and employees of Cole.  The course of this investigation or other litigation or investigations arising out of the restatement of Cole’s financial statements cannot be predicted. In addition, under certain circumstances Cole would be obliged to indemnify the individual current and former directors and officers who are named as defendants in litigation or who are or become involved in an investigation. Cole is honoring its obligations to advance reasonable attorneys’ fees incurred by current and former officers and directors who are involved in the SEC investigation subject to undertakings provided by such individuals. Cole has insurance available with respect to a portion of these indemnification obligations. If the investigation develops into litigation and Cole is not successful in defending against that litigation, or is obligated to indemnify individuals who do not succeed in defending against such litigation, there may be a material adverse effect on our financial condition, cash flow and results of operations.