LensCrafters 2006 Annual Report Download - page 132
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>132 | ANNUAL REPORT 2006
The deferred tax assets and liabilities as of December 31, 2005 and 2006, respectively, were
comprised of:
Year ended December 31, (Euro/000) 2005 2006
Deferred tax Deferred tax
asset/(liability) asset/(liability)
Current deferred income tax assets
Inventory 67,053 65,192
Insurance and other reserves 20,589 29,000
Net operating loss carryforwards 1,674 1,525
Loss on investments 2,513 1,094
Right of return reserve 8,039 8,934
Deferred revenue - extended warranty contracts 5,336 7,192
Other, net 3,171 1,899
Current deferred tax assets 108,375 114,836
Current deferred income tax liabilities
Dividends (8,766) (13,308)
Trade name (5,597) (4,816)
Other (4,231) (8,765)
Current deferred tax asset, net 89,781 87,947
Non current deferred income tax assets
Net operating loss carryforwards 52,659 42,924
Recorded reserves 11,248 10,074
Occupancy reserves 13,042 11,616
Employee-related reserves (including minimum pension liability) 22,585 25,321
Trade name 78,746 84,013
Other,net 12,861 (1,752)
Valuation allowance (15,038) (26,682)
Non current deferred tax assets, net of valuation allowances 176,103 145,514
Non current deferred income tax liabilities
Difference in basis of fixed assets (116,614) (66,282)
Trade name (116,551) (62,639)
Equity revaluation step-up (40,950) (40,950)
Other intangibles (18,627) (16,914)
Non current deferred tax liability, net (116,639) (41,270)
In 2004, the Italian statutory tax rate was reduced to 37.25%. As a consequence, deferred tax
assets and liabilities have been recomputed in line with the new tax rate. The result of the change
in the Italian tax rate was immaterial and has been included in deferred tax expense.
Italian companies’ taxes are subject to review pursuant to Italian law. As of December 31, 2006, tax
years from 2001 through the most recent year were open for such review.Certain Luxottica Group
subsidiaries are subject to tax reviews for previous years and during 2005 a wholly owned Italian
subsidiary was subjected to a tax inspection. As a result of this, some insignificant recorded losses
were reversed and an immaterial amount was accrued for as a liability. Management believes no
significant unaccrued liabilities will arise from the related tax reviews.