LensCrafters 2006 Annual Report Download - page 133

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NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS |133 <
The Company generally does not provide for an accrual for income taxes on undistributed
earnings of its foreign operations to the related Italian parent company that are intended to be
permanently invested. It is not practicable to determine the amount of income tax liability that
would result had such earnings actually been repatriated. In connection with the 2006 earnings of
certain subsidiaries, the Company has provided for an accrual for Italian income taxes related to
declared dividends of earnings.
At December 31, 2006, the Company had restricted Federal net operating loss carryforwards in the
United States of America of approximately Euro 105.6 million which may be used against income
generated by certain of its U.S.subsidiaries. Such net operating losses begin expiring in 2019. With
the acquisition of Cole, the Company acquired approximately Euro 26.5 million of restricted
Federal net operating loss carryforwards, of which approximately Euro 22.0 million and Euro 0.3
million were utilized in 2005 and 2006, respectively. The utilization of a portion of the Cole loss
carryforwards is limited due to restrictions imposed by U.S. tax rules governing utilization of loss
carryforwards following changes in ownership. A portion of the Cole net operating loss
carryforwards may expire each year going forward. No net operating loss carryforwards expired in
2005 or 2006.
As of December 31, 2005 and 2006, the Company has recorded an aggregate valuation allowance
of Euro 15.0 million and Euro 26.7 million, respectively, against deferred tax assets as it is more
likely than not that the above deferred income tax assets will not be fully utilized in future periods.
9. LONG-TERM DEBT
Long-term debt consisted of the following:
Year ended December 31, (Euro/000) 2005 2006
Credit agreement with various Italian financial institutions (a) 275,000 245,000
UniCredito Italiano credit facility (b) --
Senior unsecured guaranteed notes (c) 246,273 165,022
Credit agreement with various financial institutions (d) 974,338 895,240
Capital lease obligations, payable in installments through 2007 3,372 2,766
Other loans with banks and other third parties, interest at
various rates (from 0.25 to 14.62% per annum), payable
in installments through 2014. Certain subsidiaries' fixed
assets are pledged as collateral for such loans (e) 29,926 11,234
Total 1,528,909 1,319,262
Current maturities 110,978 359,527
(a) In December 2002, the Company entered into an unsecured credit facility with Banca Intesa
S.p.A.The unsecured credit facility provided borrowing availability of up to Euro 650 million. This
facility included a term portion of Euro 500 million which required a balloon payment of Euro 200
million in June 2004 and equal quarterly instalments of principal of Euro 50 million subsequent to
that date. Interest accrued on the term portion based on Euribor as defined in the agreement plus
0.45%. The revolving portion provided borrowing availability of up to Euro 150 million. Amounts
borrowed under the revolving loan could be borrowed and repaid until final maturity. The final
maturity of all outstanding principal amounts and interest was December 27, 2005. In December
2005, the Company repaid in full all the outstanding amounts (Euro 50 million outstanding on the
term portion and Euro 75 million outstanding on the revolving portion) under this credit facility.