LensCrafters 2005 Annual Report Download - page 120

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NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS | 119 <
related expenses and dividends to receive) was allocated to the assets acquired and liabilities assumed
based on their fair value at the date of the acquisition. Since there was no additional fair value of assets
acquired and liabilities assumed, the difference between the purchase price and the value of the
minority interest in OPSM has been allocated entirely to goodwill for an amount of Euro 46.3 million (A$
77.7 million).
b) I.C. Optics
On January 13, 2003, the Company announced the signing of a worldwide license agreement for the
design, production and distribution of Versace, Versus and Versace Sport sunglasses and prescription
frames. The initial ten-year agreement is renewable for an additional ten years. The transaction was
completed through the purchase of IC Optics Group (“IC Optics”), an Italian-based group that
produces and distributes eyewear, for an aggregate amount of Euro 5.4 million. Prior to this transaction,
Gianni Versace S.p.A. and Italocremona S.p.A. held IC Optics through a 50/50 joint venture. The
acquisition was accounted for in accordance with SFAS 141 and, accordingly, the purchase price has
been allocated to the fair market value of the assets and liabilities of the company acquired including an
intangible asset for the license agreement for an amount of approximately Euro 28.8 million and goodwill
for an amount of approximately Euro 10.7 million. Further, an amount of Euro 25 million has been paid
for an option right, which enables the Company to extend the original royalty agreement for an additional
ten years. No pro forma financial information is presented, as the acquisition was not material to the
Company’s Consolidated Financial Statements.
c) E.I.D.
On July 23, 2003, the Company announced the signing of a ten-year worldwide license agreement for
exclusive production and distribution of prescription frames and sunglasses with the Prada and Miu Miu
names. The deal was finalized through Luxottica’s purchase of two of Prada’s fully-owned companies,
E.I.D. Italia and E.I.D. Luxembourg, that produce and distribute eyewear, for the amount of Euro 26.5
million. The acquisition was accounted for in accordance with SFAS 141 and, accordingly, the purchase
price has been allocated to the fair market value of the assets and liabilities of the companies acquired
including an intangible asset for the license agreement for an amount of approximately Euro 29.7 million.
Goodwill for an amount of Euro 11.1 million over net assets acquired has been recorded in the
accompanying Consolidated Balance Sheet. No pro forma financial information is presented, as the
acquisition was not material to the Company’s Consolidated Financial Statements.
d) Cole National
On July 23, 2003, the Company formed an indirect wholly owned subsidiary Colorado Acquisition Corp.
for the purpose of acquiring all the outstanding common stock of Cole, a publicly traded company on
the New York Stock Exchange. On January 23, 2004, as amended as of June 2, 2004 and July 15, 2004,
the Company and Cole entered into a definitive merger agreement with the unanimous approval of the
Boards of Directors of both companies. On October 4, 2004, Cole became an indirect wholly owned
subsidiary of the Company. The aggregate consideration paid by the Company to former shareholders,
option holders and holders of restricted stock of Cole was approximately Euro 407.9 million (US$ 500.6
million). In connection with the merger, the Company assumed outstanding indebtedness with an
approximate aggregate fair value of the principal balance of Euro 253.2 million (US$ 310.8 million). The
acquisition was accounted for using the purchase method and, accordingly, the purchase price of Euro
423.7 million (US$ 520.1 million), including approximately Euro 15.8 million (US$ 19.5 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 used various methods to calculate the fair
value of the assets and liabilities and all valuations have been completed. The excess of purchase price
over net assets acquired (“goodwill”) has been recorded in the accompanying Consolidated Balance
Sheet. The acquisition of Cole National was made as result of the Company’s strategy to continue
expansion of its retail business in North America.