LensCrafters 2007 Annual Report Download - page 138

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS | 137 <
5. ACQUISITIONS AND INVESTMENTS
a) Oakley
On June 20, 2007, the Company and Oakley entered into a definitive merger agreement with the
unanimous approval of the Boards of Directors of both companies. On November 14, 2007, the
merger was consummated, the Company acquired all the outstanding common stock of Oakley
which became a wholly owned subsidiary of the Company and its results of operations began to be
included in the consolidated statements of income of the Company. The aggregate consideration
paid by the Company to the former shareholders, option holders, and holders of other equity rights
of Oakley was approximately Euro 1,425.6 million (US$ 2,091 million) in cash. In connection with the
merger, the Company assumed approximately Euro 166.6 million (US$ 244.4 million) of outstanding
indebtedness. The purchase price of 1,438.7 million (US$ 2,110.5 million) including approximately
Euro 13.1 million (US$ 19.2 million) of direct acquisition related expenses was allocated to the
assets acquired and liabilities assumed based on their fair value at the date of the acquisition. The
Company used various methods to calculate the fair value of the assets acquired and the liabilities
assumed. Although all valuations are not yet completed, the Company believes that the preliminary
allocation of the purchase price is reasonable, but is subject to revisions upon completion of the
final valuation of certain assets and liabilities, which is expected to occur during 2008. As such, the
final allocation of the purchase price among the assets and liabilities acquired may change in 2008
to reflect the final amounts. The excess of purchase price over net assets acquired (“goodwill”) has
been recorded in the accompanying consolidated balance sheet. No portion of this goodwill is
deductible for tax purposes. The acquisition of Oakley was made as a result of the Company’s
strategy to strengthen its performance sunglass wholesale and retail businesses worldwide.
The purchase price (including acquisition-related expenses) has been allocated based upon the fair
value of the assets acquired and liabilities assumed as follows:
(Euro/000)
ASSETS ACQUIRED
Cash and cash equivalents 62,396
Inventories 132,267
Property, plant and equipment 142,483
Deferred tax assets 29,714
Prepaid expenses and other current assets 11,326
Accounts receivable 104,569
Trade names and other intangible 544,578
Other assets 3,978
LIABILITIES ASSUMED
Accounts payable (36,285)
Accrued expenses and other current liabilities (82,434)
Deferred tax liabilities (183,046)
Outstanding borrowings on credit facilities (166,577)
Other long term liabilities (22,891)
Bank overdrafts (5,575)
Fair value of net assets 534,502
Goodwill 904,148
TOTAL PURCHASE PRICE 1,438,650