LensCrafters 2003 Annual Report Download - page 54

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accordingly, the purchase price has been allocated to the assets acquired and the liabilities assumed based on
their fair values at the date of acquisition. The excess of purchase price over the fair value of net assets acquired
(466.8 million at the date of acquisition) was recorded as goodwill in the accompanying consolidated balance
sheets. With the Company’s adoption of SFAS No. 142 effective January 1, 2002, goodwill is no longer subjected
to periodic amortization, but rather is subjected to an annual impairment test.
(d) The acquisition of OPSM in 2003 was accounted for by the purchase method and, accordingly, the purchase price
has been preliminary allocated to the assets acquired and the liabilities assumed based on their fair values at the
date of acquisition. The excess of purchase price over the fair value of net assets acquired (151.4 million at the
date of acquisition) was recorded as goodwill in the accompanying consolidated balance sheets.
(e) Goodwill was also created as the difference between the purchase price paid over the value of net assets of many
additional businesses acquired, resulting from retail locations and wholesales entities over the past several years.
Intangible assets-net consisted of the following (thousands of Euro):
December 31,
2002 2003
LensCrafters trade name, the value of which has been established
as part of an independent valuation performed in connection with
the acquisition of LensCrafters, net of accumulated amortization
of 63,996 and 60,252 as of December 31, 2002, and 2003, respectively (f). 145,827 114,392
Ray-Ban acquired trade names, net of accumulated amortization
of 48,896 and 62,866 as of December 31, 2002, and 2003, respectively (f). 230,305 216,334
Sunglass Hut trade name, the value of which has been established as part
of an independent valuation performed in connection with the acquisition
of Sunglass Hut, net of accumulated amortization of 20,162 and 26,371
as of December 31, 2002, and 2003, (see note 4) (f). 267,868 213,368
OPSM trade name, the value of which has been established as part
of an independent valuation performed in connection with the acquisition
of OPSM, net of accumulated amortization of 2,444
as of December 31, 2003, (see note 4) (f). - 144,205
Other intangibles, net (see note 4). 27,866 76,399
TOTAL 671,866 764,698
(f) The LensCrafters, Ray-Ban, Sunglass Hut International and OPSM trade names are amortized on a straight-line
basis over a period of 25 years, 20 years, 25 years and 25 years, respectively, as the Company believes these
trade names to be finite lived assets.
Projected intangible assets amortization for each of the following years (thousands of Euro):
2004 40,936
2005 40,936
2006 39,136
2007 39,349
2008 39,266
7INCOME TAXES
Income before provision for income taxes and the provision for income taxes consisted of the following (thousands
of Euro):
December 31,
2001 2002 2003
Income before provision for income taxes
Italian companies 336,521 229,527 146,055
Foreign companies 104,790 309,915 243,738
TOTAL 441,311 539,442 389,793
Provision for income taxes
Current
Italian companies 15,079 52,616 17,313
Foreign companies 124,354 117,865 87,150
TOTAL 139,433 170,481 104,463
Deferred
Italian companies (10,619) (14,204) 14,174
Foreign companies (5,364) 6,419 (1,309)
(15,983) (7,785) 12,865
TOTAL 123,450 162,696 117,328
The Italian statutory tax rate is the result of two components: national (“IRPEG”) and regional (“IRAP”) tax. IRAP
could have a substantially different base for its computation as to IRPEG.