LensCrafters 2007 Annual Report Download - page 147

> 146 | ANNUAL REPORT 2007
penalties and interest during 2007 is immaterial and in total, as of December 31, 2007, the Company
has recognized a liability for penalties of approximately Euro 5.9 million and interest of
approximately Euro 9.6 million.
The Group is subject to taxation in Italy and foreign jurisdictions of which only the U.S. federal is
significant.
Italian companies’ taxes are subject to review pursuant to Italian law. As of December 31, 2007, tax
years from 2002 through the most recent year were open for such review. Certain Luxottica Group
subsidiaries are subject to tax reviews for previous years and, during 2005 a wholly owned Italian
subsidiary was subjected to a tax inspection. As a result of this, some insignificant recorded losses
were reversed and an immaterial amount was accrued for as a liability. Management believes no
significant unaccrued liabilities will arise from the related tax reviews.
The Group’s U.S. federal tax years for 2004, 2005 and 2006 are subject to examination by the tax
authorities.
9. LONG-TERM DEBT
Long-term debt consists of the following:
Year ended December 31 (Euro/000) 2007 2006
Credit agreement with various Italian financial institutions (a) 185,000 245,000
Senior unsecured guaranteed notes (b) 97,880 165,022
Credit agreement with various financial institutions (c) 1,059,918 895,240
Credit agreement with various financial institutions for Oakley Acquisition (e) 1,369,582 -
QCapital lease obligations, payable in installments through 2007 1,866 3,626
Other loans with banks and other third parties, interest at various rates
payable in installments through 2014. Certain subsidiaries' fixed assets are
pledged as collateral for such loans (d) 4,894 10,374
Total 2,719,140 1,319,262
Current maturities 792,617 359,527
(a) In September 2003, the Company acquired its ownership interest of OPSM and more than 90%
of the performance rights and options of OPSM for an aggregate of AUD 442.7 million (Euro 253.7
million), including acquisition expenses. The purchase price was paid for with the proceeds of a
credit facility with Banca Intesa S.p.A. of Euro 200 million, in addition to other short-term lines
available. The credit facility includes a Euro 150 million term loan, which requires repayment of
equal semi-annual instalments of principal of Euro 30 million starting on September 30, 2006 until
the final maturity date. Interest accrues on the term loan at Euribor (as defined in the agreement)
plus 0.55% (5.315% on December 31, 2007). The revolving loan provides borrowing availability of
up to Euro 50 million; amounts borrowed under the revolving portion can be borrowed and repaid
until final maturity. At December 31, 2007, Euro 25 million had been drawn from the revolving
portion. Interest accrues on the revolving loan at Euribor (as defined in the agreement) plus 0.55%
(4.988% on December 31, 2007). The final maturity of the credit facility is September 30, 2008. The
Company can select interest periods of one, two or three months. The credit facility contains
certain financial and operating covenants. The Company was in compliance with those covenants
as of December 31, 2007. Under this credit facility Euro 85 million and Euro 145 million were
borrowed as of December 31, 2007 and 2006, respectively.