LensCrafters 2007 Annual Report Download - page 155

> 154 | ANNUAL REPORT 2007
The actual allocation percentages at any given time may vary from the targeted amounts due to
changes in stock and bond valuations as well as timing of contributions to and benefit payments
from the pension plan trusts.
With the merger of the Cole Plan into the U.S. Associates Plan as of December 31, 2007, the assets
of the Cole Plan were liquidated and transferred to the Luxottica Plan portfolio. This cash was then
re-invested to achieve the targeted asset allocation percentages. Plan assets are invested in
diversified portfolios consisting of an array of asset classes within the above target allocations and
using a combination of active and, in the case of the Cole plan, passive investment strategies.
Active strategies employ multiple investment management firms. Risk is controlled through
diversification among asset classes, managers, styles, market capitalization (equity investments)
and individual securities. Certain transactions and securities are not authorized to be conducted or
held in the pension trusts, such as ownership of real estate other than real estate investment trusts,
commodity contracts, and American Depositary Receipts (“ADRs”) or common stock of the
Company. Risk is further controlled both at the asset class and manager level by assigning
benchmarks and excess return targets. The investment managers are monitored on an ongoing
basis to evaluate performance against the established market benchmarks and return targets.
Each of the defined benefit pension plans has an investment policy that was developed to serve as
a management tool to provide the framework within which the fiduciary’s investment decisions are
made; establish standards to measure investment manager’s performance; outline the roles and
responsibilities of the various parties involved; and describe the ongoing review process.
Benefit payments. The following estimated future benefit payments, which reflect expected future
service, are expected to be paid in the years indicated for both the U.S. Associates Pension Plan
reflecting the Cole Plan merger and the Holdings and Cole Supplemental Plans:
(Euro/000) Pension plans Serp plans
2008 9,500 770
2009 9,850 528
2010 10,574 529
2011 11,777 531
2012 12,901 1,176
2013-2017 83,792 5,213
Contributions. The Company expects to contribute Euro 13.7 million to its pension plan and Euro
0.8 million to the SERP in 2008.
Other benefits. The Company provides certain postemployment medical, disability, and life
insurance benefits to its U.S. Associates. The Company’s accrued liability related to this obligation
as of December 31, 2007 and 2006 was Euro 1.4 million and Euro 1.3 million, respectively, and is
included in other long term liabilities on the consolidated balance sheets.
The Company sponsors a tax incentive savings plan covering all full-time employees. The Company
makes quarterly contributions in cash to the plan based on a percentage of employees’
contributions. Additionally, the Company may make an annual discretionary contribution to the plan,
which may be made in the Parent’s ADR’s or cash. Aggregate contributions made to the tax
incentive savings plan by the Company were Euro 8.1 million and Euro 9.2 million for fiscal years
2007 and 2006, respectively. For fiscal years 2007 and 2006 these contributions do not include an
accrual for a discretionary match.