LensCrafters 2004 Annual Report Download - page 113

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
112
3. INVENTORIES
Inventories consisted of the following:
4. ACQUISITIONS
AND INVESTMENTS
A) SUNGLASS HUT INTERNATIONAL, INC.
On February 20, 2001, Luxottica Group formed an
indirect wholly-owned U.S. subsidiary, Shade
Acquisition Corp., for the purpose of making a
tender offer for all the outstanding common stock of
Sunglass Hut International, Inc. (“SGHI”), a publicly
traded company on the NASDAQ National Market.
The Tender Offer commenced on March 5, 2001 and
was completed on March 30, 2001. On April 4,
2001, Shade Acquisition Corp. was merged with and
into SGHI and SGHI became an indirect wholly-
owned subsidiary of the Company. As such, the
results of SGHI have been consolidated into the
Company’s consolidated financial statements as of
the acquisition date. The acquisition was accounted
by using the purchase method, and accordingly, the
purchase price of Euro 558 million (including
approximately Euro 33.9 million of direct acquisition-
related expenses) was allocated to the assets
acquired and liabilities assumed based on their fair
value at the date of the acquisition. The Company
uses many different valuation techniques to
determine the fair value of the net assets acquired
including but not limited to discounted cash flow
and present value projections. Intangible assets are
recognized separate from goodwill if they arise from
contractual or other legal rights or if they do not meet
the definition of separable as noted in APB No. 16,
Business Combinations, subsequently superseded
by SFAS No. 141, Business Combinations (“SFAS
141”). As a result of the final valuations, which were
completed in March 2002, the aggregate balance of
goodwill and other intangibles previously recorded
as of December 31, 2001 increased by
approximately Euro 147 million during the year
ended December 31, 2002. The excess of purchase
price over net assets acquired (“goodwill”) has been
recorded in the accompanying consolidated
balance sheet.
The purchase price and expenses have been
allocated based upon the valuation of the
Company’s acquired assets and liabilities assumed
as follows:
Raw materials and packaging
Work in process
Finished goods
Total
In thousands of Euro
At December 31
62,209
25,363
316,644
404,216
2003
50,656
24,486
358,016
433,158
2004