LensCrafters 2005 Annual Report Download - page 117

> 116 | ANNUAL REPORT 2005
SFAS 155 is effective for all financial instruments acquired or issued after the beginning of an entity’s first
fiscal year that begins after September 15, 2006. The adoption of SFAS 153 is not expected to have a
material effect on the Company’s Consolidated Financial Statements.
Information expressed in U.S. Dollars - The Company’s Consolidated Financial Statements are
stated in Euro, the currency of the country in which the Parent Company is incorporated and
operates. The translation of Euro amounts into U.S. Dollar amounts is included solely for the
convenience of international readers and has been made at the rate of Euro 1 to U.S. Dollar 1.1842.
Such rate was determined by using the noon buying rate of the Euro to U.S. Dollar as certified for
customs purposes by the Federal Reserve Bank of New York as of December 31, 2005. Such
translations should not be construed as representations that Euro amounts could be converted into
U.S. Dollar at that or any other rate.
Reclassifications - The presentation of certain prior year information has been reclassified to conform
to the current year presentation.
2. RELATED PARTY TRANSACTIONS
Fixed assets - In January 2002, a subsidiary of Luxottica Group acquired certain assets for Euro
28.5 million and assumed a bank loan from “Partimmo S.a.S.”, a company owned by the
Company’s Chairman. The assets acquired were a building, including all improvements thereto, for
a total cost of Euro 42.0 million. The Company recorded these assets at their historic cost. The
Company’s headquarters are located in this building. The bank loan acquired had an outstanding
balance of Euro 20.6 million on such date. In November 2004, the loan was fully repaid. In
connection with the acquisition of this building the Company’s subsidiary entered into an agreement
with the Company’s Chairman who leases a portion of this building for Euro 0.5 million annually. The
expiration date of this lease is 2010.
License agreement - The Company has a worldwide exclusive license agreement to manufacture
and distribute ophthalmic products under the name of Brooks Brothers. The Brooks Brothers trade
name is owned by Retail Brand Alliance, Inc. (“RBA”), which is owned and controlled by a Director of
the Company. The license agreement expires in 2009. Royalties paid to RBA for such agreement were
Euro 1.1 million, Euro 0.9 million and Euro 0.5 million in the years ended December 31, 2003, 2004
and 2005, respectively.
In July 2004, the Company signed a worldwide exclusive license agreement to manufacture and
distribute ophthalmic products under the name of Adrienne Vittadini. The Adrienne Vittadini trade name
is owned by RBA. The license agreement expires on December 31, 2007. For the years ended
December 31, 2004 and 2005, royalties paid to RBA for such agreement were Euro 0.9 million and Euro
0.9 million, respectively.
Service revenues - During the years ended December 31, 2004 and 2005, Luxottica U.S. Holdings
Corp. (“US Holdings”) performed certain services for RBA. Amounts received for the services provided
were Euro 0.5 million, Euro 0.7 million and Euro 0.6 million in fiscal 2003, 2004 and 2005, respectively.
Stock incentive plan - In September 2004, the Company’s Chairman and majority shareholder, Mr.
Leonardo Del Vecchio, allocated shares held through La Leonardo Finanziaria S.r.l., an Italian holding
company of the Del Vecchio family, representing 2.11% (or 9.6 million shares) of the Company’s
currently authorized and issued share capital, to a Stock Option plan for top management of the
Company at an exercise price of Euro 13.67 per share (the closing stock price at December 31, 2005
on the Milan Stock Exchange was Euro 21.43 per share). The Stock Options to be issued under the