LensCrafters 2005 Annual Report Download - page 127
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> 126 | ANNUAL REPORT 2005
The deferred tax assets and liabilities as of December 31, 2004 and 2005, respectively, were
comprised of:
At December 31 - In thousands of Euro 2004 2005
Deferred tax asset/(liability) Deferred tax asset/(liability)
Current deferred income tax assets
Inventory 47,424 68,176
Insurance and other reserves 27,212 22,765
Recorded reserves 10,248 -
Net operating loss carryforwards 47,101 1,674
Loss on investments 3,930 2,513
Right of return reserve 10,572 8,039
Deferred revenue - extended warranty contracts 10,508 5,336
Other, net 14,232 3,691
Current deferred tax assets 171,227 112,194
Current deferred income tax liabilities
Dividends (6,092) (8,766)
Trade name (5,179) (5,597)
Asset held for sale - Pearle Europe (55,448) -
Other - (4,231)
Current deferred tax asset - net 104,508 93,600
Non current deferred income tax assets
Net operating loss carryforwards 70,071 52,659
Recorded reserves 14,305 11,248
Occupancy reserves 15,558 14,305
Employee-related reserves (including minimum pension liability) 28,503 22,585
Trade name - 78,746
Other, net 10,767 14,185
Valuation allowance (22,837) (15,038)
Non current deferred tax assets - net of valuation allowances 116,367 178,690
Non current deferred income tax liabilities
Difference in basis of fixed assets (126,324) (129,682)
Depreciation (2,843) -
Trade name (108,833) (116,551)
Trade name revaluation step-up - (40,950)
Other intangibles (19,917) (18,627)
Trademark accelerated amortization (74,341) -
Non current deferred tax liability - net (215,891) (127,120)
In 2004, the Italian statutory tax rate was reduced to 37.25%. As a consequence, deferred tax assets
and liabilities have been recomputed in line with the new tax rate. The result of the change in the Italian
tax rate was immaterial and has been included in deferred tax expense.
Italian companies’ taxes are subject to review pursuant to Italian law. As of December 31, 2005, tax years
from 1999 through the most recent year were open for such review. Certain Luxottica Group subsidiaries
are subject to tax reviews for previous years and during 2005 a wholly owned Italian subsidiary was
subjected to a tax inspection. As a result of this, some insignificant recorded losses were reversed and