LensCrafters 2006 Annual Report Download - page 126

>126 | ANNUAL REPORT 2006
including but not limited to fixed assets and inventory have not been completed and are subject to
change during 2007. The Company uses many different valuation techniques to determine the fair
value of the net assets acquired including but not limited to discounted cash flow and present value
projections. Intangible assets are recognized separate from goodwill if they arise from contractual or
other legal rights or if they do not meet the definition of separable as noted in SFAS 141. Estimated
preliminary goodwill in an amount of Euro 29.1 million in excess of the net assets acquired has been
recorded in the accompanying Consolidated Balance Sheets. The acquisition was made as a result
of the Company’s strategy to continue expansion of its retail business in The People’s Republic of
China. No pro forma financial information is presented, as the acquisition was not material to the
Company’s Consolidated Financial Statements.
•In May 2006, the Company completed the purchase of the remaining 49% stake of the Turkish-
based distributor Luxottica Gozluk Ticaret A.S. (“Luxottica Turchia”) for an amount of Euro 15
million. Goodwill of Euro 7.0 million representing the excess of the net assets acquired has been
recorded in the accompanying Consolidated Balance Sheets. In November 2006 Standard
Gozluk Industri Ve Ticaret A.S. (“Standard”), a Turkish wholesaler fully owned by the former
minority shareholders of Luxottica Turchia, merged with Luxottica Turchia. As a result of the
merger the former shareholders of Standard received a minority stake of Luxottica Turchia of
35.16% and a put option to sell the shares to the Company,while the Company was granted a
call option on the minority stake. The acquisition was accounted for in accordance with SFAS
141 and, accordingly,the total consideration of Euro 46.7 million has been allocated to the fair
market value of the assets and liabilities of the company as defined by the purchase agreement.
All valuations of net assets including but not limited to fixed assets and inventory have not been
completed and are subject to change during 2007. The Company uses many different valuation
techniques to determine the fair value of the net assets acquired including but not limited to
discounted cash flow and present value projections. Intangible assets are recognized separate
from goodwill if they arise from contractual or other legal rights or if they do not meet the
definition of separable as noted in SFAS 141. Estimated goodwill in an amount of Euro 35.5
million in excess of the net assets acquired has been recorded in the accompanying
Consolidated Balance Sheets. The acquisition was made as result of the Company’s strategy to
continue expansion of its wholesale business in Turkey, in particular in the prescription frames
segment of the market. No pro forma financial information is presented, as the acquisition was
not material to the Company’s Consolidated Financial Statements.
•In November 2006, the Company completed the acquisition, which was announced in June
2006, of Modern Sight Optics, a leading premium optical chain that operates a total of 28 stores
in Shanghai, China. Modern Sight Optics has an existing position in the premium segment of the
optical market and brings to the Company 28 high-end stores in Shanghai. These stores are
located in premium and high-end commercial centers and shopping malls situated primarily in
Shanghai’s downtown area and affluent residential areas. The Company acquired 100% of the
equity interest in Modern Sight Optics for total consideration of RMB 140 million (approximately
Euro 14 million). The acquisition was accounted for in accordance with SFAS 141 and,
accordingly,the total consideration of Euro 16.3 million has been allocated to the fair market
value of the assets and liabilities of the company as defined by the purchase agreement. All
valuations of net assets including but not limited to fixed assets and inventory have not been
completed and are subject to change during 2007. The Company uses many different valuation
techniques to determine the fair value of the net assets acquired including but not limited to
discounted cash flow and present value projections. Intangible assets are recognized separate
from goodwill if they arise from contractual or other legal rights or if they do not meet the
definition of separable as noted in SFAS 141. Estimated preliminary goodwill for an amount of
Euro 15.6 million representing the excess of the net assets acquired has been recorded in the