LensCrafters 2005 Annual Report Download - page 123

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> 122 | ANNUAL REPORT 2005
f) Pending acquisitions
• In July 2005, the Company announced that SPV Zeta S.r.l., a new wholly owned Italian subsidiary, will
acquire 100% of the equity interest in Beijing Xueliang Optical Technology Co. Ltd. (“Xueliang
Optical”) for a purchase price of Chinese Renminbi (“RMB”) 169 million (approximately Euro 17
million), plus RMB 40 million (approximately Euro 4 million) in assumed liabilities. Xueliang Optical
had unaudited sales for the 2004 fiscal year of RMB 102 million (approximately Euro 10 million).
Xueliang Optical has 79 stores in Beijing. Completion of the transaction remains subject to
customary approvals by the relevant Chinese governmental authorities. The Company has received
such approval and expects to close the transaction in the second quarter of 2006.
• In October 2005, the Company announced that its new wholly owned Italian subsidiary, SPV Eta
S.r.l., will acquire 100% of the equity interests in Ming Long Optical, the largest premium optical
chain in the province of Guangdong, China, for a purchase price of RMB 290 million (approximately
Euro 29 million). Completion of the transaction remains subject to customary approvals by the
relevant Chinese governmental authorities. The Company currently anticipates receiving such
approvals by June 2006.
5. PROPERTY, PLANT AND EQUIPMENT - NET
Property, plant and equipment - net consisted of the following:
At December 31 - In thousands of Euro 2004 2005
Land and buildings, including leasehold improvements 475,605 563,535
Machinery and equipment 473,515 566,185
Aircraft 25,908 39,107
Other equipment 305,140 395,705
Building, held under capital lease 2,332 -
1,282,500 1,564,532
less: Accumulated depreciation and amortization 683,255 829,417
Total 599,245 735,115
Depreciation and amortization expense relating to property, plant and equipment for the years ended
December 31, 2003, 2004 and 2005 was Euro 92.2 million, Euro 101.1 million and Euro 129.6 million,
respectively. Included in other equipment is approximately Euro 26.6 million and Euro 69.9 million of
construction in progress as of December 31, 2004 and 2005, respectively.
The increase in the value of the aircraft is due to the purchase of a new aircraft in 2005 to replace the
previous aircraft which became obsolete. The net book value of the old aircraft of Euro 10.8 million is
included in “Asset held for sale” for a net book value, which is less then the fair value less cost to sell,
and the aircraft is expected to be sold in June 2006. The Company has stopped recording depreciation
expense on such asset beginning on the date that the asset was determined to be “held for sale.”