LensCrafters 2006 Annual Report Download - page 129

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS |129 <
(Euro/000) Retail Wholesale Total
segment segment
Balance as of January 1, 2005 1,158,043 295,937 1,453,980
Acquisitions (a) 71,897 - 71,897
Cole’s final purchase price allocation (8,165) - (8,165)
Change in exchange rates (b) 129,001 (40) 128,961
Balance as of December 31, 2005 1,350,776 295,897 1,646,673
Acquisitions (a) 111,186 44,738 155,924
Adjustments on previous acquisitions (3,249) - (3,249)
Change in exchange rates (b) (104,714) (20) (104,734)
Balance as of December 31, 2006 1,353,999 340,615 1,694,614
(a) Goodwill acquired in 2005 consisted primarily of the OPSM minority interest acquisition and some other minor retail acquisitions. Goodwill acquired in 2006
consisted primarily of the acquisition of Xueliang, Ming Long and Modern Sight in China, and of Shopper Optical in North America in the Retail Segment, and of the
acquisition in Turkey in the Wholesale Segment (See Note 4).
(b) Certain goodwill balances are denominated in currencies other than Euro (the reporting currency) and, as such, balances may fluctuate due to changes in exchange rates.
Intangible assets-net consisted of the following:
December 31, (Euro/000) 2005 2006
LensCrafters trade name, net of accumulated amortization of Euro
78,956 thousand and Euro 77,518 thousand as of December 31,
2005 and 2006, respectively (a) 106,823 89,187
Ray-Ban acquired trade names, net of accumulated amortization
of Euro 90,806 thousand and Euro 104,776 thousand as of
December 31, 2005 and 2006, respectively (a) 188,394 174,424
Sunglass Hut trade name, net of accumulated amortization
of Euro 48,455 thousand and Euro 52,633 thousand as of
December 31, 2005 and 2006, respectively (a) 206,570 176,207
OPSM trade names, net of accumulated amortization of Euro
14,786 thousand and Euro 24,466 thousand as of December 31,
2005 and 2006, respectively (see Note 5) (a) 138,172 123,158
Various trade names of Cole, net of accumulated amortization
of Euro 2,519 thousand and Euro 4,070 thousand as of December 31,
2005 and 2006, respectively (see Note 5) (a) 47,876 36,605
Distributor network, net of accumulated amortization of Euro 4,791
thousand and Euro 8,946 thousand as of December 31, 2005
and 2006, respectively (see Note 5) (b) 96,370 82,499
Customer list and contracts, net of accumulated amortization
of Euro 4,006 thousand and Euro 5,263 thousand as of December 31,
2005 and 2006, respectively (see Note 5) (b) 56,275 47,070
Franchise agreements, net of accumulated amortization of Euro
1,195 thousand and Euro 1,927 thousand of December 31, 2005
and 2006, respectively (see Note 5) (b) 17,890 15,199
Other intangibles, net of accumulated amortization of Euro 58,572
thousand and Euro 52,635 thousand as of December 31, 2005
and 2006, respectively (see Note 5) (c) 97,426 86,013
Total 955,796 830,362
(a) The LensCrafters, Sunglass Hut, OPSM and Cole trade names are amortized on a straight-line basis over a period of 25 years and the Ray-Ban trade names
over a period of 20 years, as the Company believes these trade names to be finite-lived assets.
(b) Distributor network, customer contracts and lists, and franchise agreements were identifiable intangibles recorded in connection with the acquisition of Cole in
2004. These assets have finite lives and are amortized on a straight-line basis over periods ranging between 20 and 23 years. The weighted average amortization
period is 22.2 years.
(c) Other identifiable intangibles have finite lives ranging between 3 and 17 years and are amortized on a straight line basis. The weighted average amortization
period is 11.3 years. Most of these lives were determined based on the terms of the license agreements and non-compete agreements. During 2005, approximately
Euro 7.1 million of intangibles became fully amortized and were written off. During 2006, approximately Euro 11.4 million of intangibles related to a non compete
agreement of Sunglass Hut, became fully amortized and were written off.