LensCrafters 2005 Annual Report Download - page 69

Download and view the complete annual report

Please find page 69 of the 2005 LensCrafters annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 158

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158

> 68 | ANNUAL REPORT 2005
Company’s wholly owned subsidiary. The Notes can be prepaid at U.S. Holdings’ option under certain
circumstances. The proceeds from the Notes were used for the repayment of outstanding debt and for
other working capital needs. The notes contain certain financial and operating covenants. As of
December 31, 2005, the Company was in compliance with all of its applicable covenants including
calculations of financial covenants when applicable.
In connection with the issuance of the Notes, U.S. Holdings entered into three interest rate swap
agreements with Deutsche Bank AG (collectively, the “DB Swap”). The three separate agreements’
notional amounts and interest payment dates coincide with those of the Notes. The DB Swap
exchanged the fixed rate of the Notes for a floating rate of the six-month LIBOR rate plus 0.66% for the
Series A Notes and the six-month LIBOR rate plus 0.73% for the Series B and Series C Notes. In
December 2005, the DB Swap was terminated.
In September 2003, the Company acquired 82.57% of the ordinary shares of OPSM Group and more
than 90% of OPSM Group’s performance rights and options, which entitled the Company to require the
cancellation of all the performance rights and options still outstanding. The aggregate purchase price
was A$ 442.7 million (Euro 253.7 million), including acquisition expenses, and was paid for with the
proceeds of a new credit facility with Banca Intesa S.p.A. of Euro 200 million, in addition to other short-
term lines available. The credit facility includes a Euro 150 million term loan, which will require
repayment of equal semiannual installments of principal of Euro 30 million starting September 30, 2006
until the final maturity date. Interest accrues on the term loan at Euribor (as defined in the agreement)
plus 0.55% (3.04% on December 31, 2005). The revolving loan provides borrowing availability of up to
Euro 50 million; amounts borrowed under the revolving portion can be borrowed and repaid until final
maturity. At December 31, 2005, Euro 25 million had been drawn from the revolving portion. Interest
accrues on the revolving loan at Euribor (as defined in the agreement) plus 0.55% (2.76% on
December 31, 2005). The final maturity of the credit facility is September 30, 2008. The Company can
select interest periods of one, two or three months. The credit facility contains certain financial and
operating covenants. As of December 31, 2005, the Company was in compliance with all of its
applicable covenants including calculations of financial covenants when applicable. Under this credit
facility, Euro 175 million was outstanding as of December 31, 2005.
In June 2005, the Company entered into four interest rate swap transactions with various banks with an
aggregate initial notional amount of Euro 120 million which will decrease by Euro 30 million every six
months starting on March 30, 2007 (“Intesa OPSM Swaps”). These swaps will expire on September 30,
2008. The Intesa OPSM Swaps were entered into as a cash flow hedge on a portion of the Banca
Intesa Euro 200 million unsecured credit facility discussed above. The Intesa OPSM Swaps exchange
the floating rate of Euribor for an average fixed rate of 2.38% per annum.
In December 2005, the Company entered into a new unsecured credit facility with Banca Popolare di
Verona e Novara S.c.ar.l. The 18-month credit facility consists of a revolving loan that provides
borrowing availability of up to Euro 100 million. Amounts borrowed under the revolving portion can be
borrowed and repaid until final maturity. At December 31, 2005, Euro 100 million had been drawn and
was outstanding from the revolving loan. Interest accrues on the revolving loan at Euribor (as defined in
the agreement) plus 0.25% (2.73% on December 31, 2005). The final maturity of the credit facility is
June 1, 2007. The Company can select interest periods of one, three or six months.
On June 3, 2004, the Company and U.S. Holdings entered into a new credit facility with a group of
banks providing for loans in the aggregate principal amount of Euro 740 million and US$ 325 million.
The five-year facility consists of three Tranches (Tranche A, Tranche B and Tranche C). Tranche A is a
Euro 405 million amortizing term loan requiring repayment of nine equal quarterly installments of
principal of Euro 45 million beginning in June 2007, which is to be used for general corporate