LensCrafters 2006 Annual Report Download - page 154

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Future minimum annual rental commitments for operating leases are as follows:
Year ending December 31, (Euro/000)
2007 195,490
2008 172,421
2009 139,002
2010 107,300
2011 80,559
Thereafter 220,664
Total 915,436
Guarantees
The United States Shoe Corporation, a wholly owned subsidiary of the Company, remains
contingently liable on seven store leases in the United Kingdom. These leases were previously
transferred to third parties. The third parties have assumed all future obligations of the leases from
the date each agreement was signed. However, under the common law of the United Kingdom,
the lessor still has the right to seek payment of certain amounts from the Company if unpaid by the
new obligor.If the Company is required to pay under these guarantees, it has the right to recover
amounts from the new obligor.These leases will expire during various years until December 31,
2015. At December 31, 2006, the maximum amount for which the Company’s subsidiary is
contingently liable is Euro 9.6 million.
Cole has guaranteed future minimum lease payments for certain store locations leased directly by
franchisees. These guarantees aggregated approximately Euro 4.3 million at December 31, 2006.
Performance under a guarantee by the Company is triggered by default of a franchisee on its lease
commitment. Generally,these guarantees also extend to payments of taxes and other expenses
payable under the leases, the amounts of which are not readily quantifiable. The terms of these
guarantees range from one to ten years. Many are limited to periods less than the full term of the
lease involved. Under the terms of the guarantees, Cole has the right to assume the primary
obligation and begin operating the store. In addition, as part of the franchise agreements, Cole
may recover any amounts paid under the guarantee from the defaulting franchisee. The Company
has accrued a liability at December 31, 2005 for the estimates of the fair value of the Company’s
obligations from guarantees entered into or modified after December 31, 2002, using an expected
present value calculation. Such amount, determined according to FIN 45, is immaterial to the
consolidated financial statements as of December 31, 2005 and 2006.
Credit facilities
As of December 31, 2005 and 2006 Luxottica Group had unused short-term lines of credit of
approximately Euro 457.2 million and Euro 581.1 million, respectively.
The Company and its wholly-owned Italian subsidiary Luxottica S.r.l. maintain unsecured lines of
credit with primary banks for an aggregate maximum credit of Euro 543.2 million. These lines of
credit are renewable annually, can be cancelled at short notice and have no commitment fees. At
December 31, 2006, these credit lines were utilized for Euro 68.0 million.
US Holdings maintains four unsecured lines of credit with four separate banks for an aggregate
>154 | ANNUAL REPORT 2006