LensCrafters 2006 Annual Report Download - page 145

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The weighted-average discount rate used in determining the net periodic benefit cost for 2005 and
2006 was 5.75%, respectively.
New accounting pronouncement -In the fourth quarter of 2006, the Company adopted SFAS no.
158, which requires employers to recognize on the balance sheet the projected benefit obligation
of pension plans and the accumulated postretirement benefit obligation for any other
postretirement plan. This requirement replaces the requirement of SFAS no. 87 to report a
minimum pension liability measured as the excess of the accumulated benefit obligation over the
fair value of plan assets and any recorded pension accrual. SFAS no. 158 also requires employers
to recognize in other comprehensive income gains or losses and prior service costs or credits that
occur during the period but would not be recognized as net periodic benefit cost as required by
SFAS no. 87, 88, and 106. There is no change in the requirements related to the income statement
recognition of net periodic benefit costs. The incremental effect of applying SFAS no. 158 on the
consolidated balance sheet at December 31, 2006 is as follows:
Incremental effects of applying SFAS no. 158 on individual line items in the Consolidated
Balance Sheet as of December 31, 2006
(Euro/000) Before Adjustments After
application application
of SFAS no. 158 of SFAS no. 158
Prepaid pension
(intangible assets) (304) 2,254 1,950
Total assets 4,912,771 2,254 4,915,025
Current liabilities - SFAS no. 106 - 185 185
Current liabilities - pension benefits - 232 232
Total current liabilities 1,424,860 417 1,425,277
Long-term SFAS no. 106 4,055 (405) 3,650
Long-term pension benefits 45,961 17,583 63,544
Non-current deferred income taxes 48,202 (6,932) 41,270
Total long-term liabilities 1,263,653 10,246 1,273,899
Accumulated other comprehensive loss (258,335) (8,409) (266,744)
Total shareholders’ equity 2,224,258 (8,409) 2,215,849
11. STOCK OPTION AND INCENTIVE PLANS
Stock option plan
Beginning in April 1998, certain officers and other key employees of the Company and its
subsidiaries were granted stock options of Luxottica Group S.p.A.under the Company’s stock
option plans (the “plans”). The aggregate number of shares permitted to be granted under these
plans to the employees is 21,299,300. The Company believes that the granting of options to these
key employees better aligns the interest of such employees with those of the shareholders. Prior to
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS |145 <