LensCrafters 2007 Annual Report Download - page 135

> 134 | ANNUAL REPORT 2007
measurement approach. In addition, acquisition related expenses will be expensed as incurred and
not included in the purchase price allocation and contingent liabilities will be separated into two
categories, contractual and non-contractual, and accounted for based on which category the
contingency falls into. This statement applies prospectively and is effective for business
combinations for which the acquisition date is on or after the beginning of the first annual reporting
period beginning after December 15, 2008. Since it will be applied prospectively it will not have an
effect on the current financial statements, however, since the Company participates in business
combinations, in the future the Company believes this statement after the adoption date could have
a significant effect on future operations.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities - Including an amendment of FASB No. 115, which allows the Company to elect
to record at fair value financial assets and liabilities, on an instrument by instrument basis, with the
change being recorded in earnings. Such election is irrevocable after elected for that instrument and
must be applied to the entire instrument. The adoption of such standard is for fiscal years beginning
after November 15, 2007. The adoption is not expected to have a material effect on the consolidated
financial statements.
In September 2006, FASB issued SFAS No. 157, Fair Value Measurements, which establishes a
definition of fair value, establishes a framework for measuring fair value and expands disclosures
about fair value measurements. SFAS No. 157 does not require new fair value measurements but
clarifies the definition, method and disclosure requirements of previously issued standards that
address fair value measurements. The adoption of such standard is for fiscal years beginning after
November 15, 2007. The Company is currently evaluating the accounting and disclosure
requirements and their effect on the consolidated financial statements.
In September 2006, FASB issued SFAS No. 158, Employer’s Accounting for Defined Benefit Pension
Other Post Retirement Plans, which requires the Company to recognize an asset or liability for the
funded status (difference between fair value of plan assets and benefit obligation, which for defined
benefit pension plans is deemed to be the Projected Benefit Obligation) of its retirement plans and
recognize changes in the funded status annually through other comprehensive income (“O.C.I.”).
Additionally, the statement changes the date as of which the funded status can be measured
(eliminates the 90 day window) with limited exceptions. The effective date of the recognition of the
funded status is for years ending after December 15, 2006, and as such, refer to Note 10 for the
effect on adoption. The effective date for the change in acceptable measurement date is for fiscal
years ending after December 15, 2008. The Company is currently evaluating the impact on the
consolidated financial statements of changing its measurement date.
2. RELATED PARTY TRANSACTIONS
Fixed assets. In 2002, a subsidiary of the Company entered into an agreement with the
Company’s Chairman to lease to him a portion of a building for Euro 0.5 million annually. The
expiration date of this lease is 2010.
As of December 31, 2007 the receivable from the Company’s Chairman amounts to Euro 0.3 million
(Euro 0.2 million as of December 31, 2006).
License agreement. The Company has a worldwide exclusive license agreement to manufacture
and distribute ophthalmic products under the name of Brooks Brothers. The Brooks Brothers trade