LensCrafters 2006 Annual Report Download - page 122

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>122 | ANNUAL REPORT 2006
On February 7, 2005, on the close of the offer, the Company acquired 15.5% for an aggregate total
of 98.5% of OPSM’s shares, which is in excess of the compulsory acquisition threshold.
Subsequently, the Company announced the start of the compulsory acquisition process for all
remaining shares in OPSM not already owned by the Company. The compulsory acquisition
process was completed on March 23, 2005 and as of that date the Company held 100% of
OPSM’s shares. The acquisition of the remaining OPSM shares was accounted for in accordance
with SFAS 141, Business Combinations, and accordingly, the purchase price of Euro 61.9 million
or AU$ 102.9 million in cash (including approximately AU$ 3.5 million of direct acquisition-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 (AU$ 77.7 million).
b) 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 a result of the Company’s strategy to
continue expansion of its retail business in North America.