LensCrafters 2006 Annual Report Download - page 123

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NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS |123 <
The purchase price (including acquisition-related expenses) has been allocated based upon the fair
value of the Company’s acquired assets and liabilities assumed as follows:
(Euro/000)
ASSETS PURCHASED
Cash and cash equivalents 60,762
Inventories 95,601
Accounts receivable 45,446
Prepaid expenses and other current assets 12,456
Property and equipment 109,174
Trade names (useful lives of 25 years, no residual value) 72,909
Distributor network (useful life of 23 years, no residual value) 98,322
Customer list and contracts (useful life of 21-23 years, no residual value) 68,385
Franchise agreements (useful life of 20 years, no residual value) 18,413
Other intangibles 17,214
Asset held for sale - Pearle Europe 143,617
Deferred tax assets 74,949
Other assets 11,252
LIABILITIES ASSUMED
Accounts payable (49,190)
Accrued expenses and other current liabilities (164,205)
Deferred tax liabilities (94,910)
Long-term debt (253,284)
Bank overdraft (22,668)
Other non current liabilities (78,425)
Fair value of net assets 165,818
Goodwill 257,922
TOTAL PURCHASE PRICE 423,740
As part of the acquisition of Cole, the Company acquired approximately 21% of the outstanding
shares of Pearle Europe B.V.(“PE”). A change of control provision included in the Articles of
Association of PE required Cole to make an offer to sell these shares to the shareholders of PE
within 30 days of the change of control, which deadline was extended by agreement of the parties.
In December 2004, substantially all the terms of the sale were established at a final cash selling
price of Euro 144.0 million, subject to customary closing conditions. The sale transaction closed in
January 2005. As the asset is denominated in Euro, which is not the functional currency of the
subsidiary that held the investment, the Company has recorded an unrealized foreign exchange
gain of approximately Euro 13.4 million (US$ 18.4 million) as of December 31, 2004, relating to the
changes in the US Dollar/Euro exchange rate between October 4, 2004 (the date of acquisition)
and December 31, 2004.