LensCrafters 2007 Annual Report Download - page 150

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS | 149 <
(d) Other loans consist of several small credit agreements.
(e) On November 14, 2007, the Group completed the merger with Oakley for a total purchase price
of approximately US$ 2.1 billion.
In order to finance the acquisition of Oakley, on October 12, 2007 the Company and its subsidiary
U.S. Holdings entered into two credit facilities with a group of banks providing for certain term
loans and a bridge loan for an aggregate principal amount of US$ 2.0 billion. The term loan facility
is a term loan of US$ 1.5 billion, with a five-year term, with options to extend the maturity on two
occasions for one year each time. The term loan facility is divided into two facilities, Facility D and
Facility E. Facility D consists of an amortizing term loan in an aggregate amount of US$ 1.0 billion,
made available to U.S. Holdings, and Facility E consists of a bullet term loan in an aggregate
amount of US$ 500 million, made available to the Company. Each facility has a five-year term, with
options to extend the maturity on two occasions for one year each time. Interest accrues on the
term loan at LIBOR plus 20 to 40 basis points based on “Net Debt to EBITDA” ratio, as defined in
the agreement (5.503% for Facility D and 5.458% for Facility E on December 31, 2007). The final
maturity of the credit facility is October 12, 2012. These credit facilities contain certain financial and
operating covenants. The Company was in compliance with those covenants as of December 31,
2007. US$ 1,500.0 million was borrowed under this credit facility as of December 31, 2007.
During the third quarter of 2007 the Group entered into ten interest rate swap transactions with an
aggregate initial notional amount of US$ 500.0 million with various banks (“Tranche E Swaps”).
These swaps will expire on October 12, 2012. The Tranche E Swaps were entered into as a cash
flow hedge on Facility E of the credit facility discussed above. The Tranche E Swaps exchange the
floating rate of Libor for an average fixed rate of 4.26% per annum. The ineffectiveness of cash flow
hedges was tested at the inception date and throughout the year. The results of the tests indicated
that the cash flow hedges are highly effective. As a consequence approximately US$ (1.4) million,
net of taxes, is included in other comprehensive income as of December 31, 2007. Based on current
interest rates and market conditions, the estimated aggregate amount to be recognized in earnings
from other comprehensive income for these cash flow hedges in fiscal 2008 is approximately US$
(3.6) million, net of taxes.
The short term bridge loan facility is for an aggregate principal amount of US$ 500 million. Interest
accrues on the short term bridge loan at LIBOR (as defined in the agreement) plus 0.15% (5.208%
on December 31, 2007). The final maturity of the credit facility is eight months from the first utilization
date.
Long-term debt, including capital lease obligations, matures in the years subsequent to December
31, 2007 as follows:
Year ended December 31 (Euro/000)
2008 792,617
2009 133,876
2010 145,265
2011 185,170
2012 1,461,700
Following years 512
Total 2,719,140