LensCrafters 2008 Annual Report Download - page 71

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in OCI and reclassified to earnings when realized. For fiscal 2007 there were no amounts reclassified from
OCI into earnings. During 2008, the Company sold the TR Note without recourse to an independent third
party for approximately Euro 1.0 million. The loss on the sale of the note of Euro 22.8 million including Euro
0.4 million previously recorded in accumulated other comprehensive income (loss) is included in other
Expense net in the consolidated statements of income.
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 Oakley’s 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 Euro 1,441.5 million (US$ 2,111.2 million) including
approximately Euro 15.9 million (US$ 20.1 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. 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 allocation was finalized in 2008 resulting in no material changes to the final fair values
allocated to inventories, intangible assets and accrued expenses from the purchase price allocation done
in 2007. The main changes from last year allocation relate to the restructuring of a part of the Retail North
America operations. The purchase price (including acquisition-related expenses) has been allocated based
upon the fair value of the assets acquired and liabilities assumed as follows (thousands of Euro):
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS |69 <
Assets acquired
Cash and cash equivalents 62,310
Inventories 122,668
Property, plant and equipment 131,466
Deferred tax assets 43,425
Prepaid expenses and other current assets 10,850
Accounts receivable 104,740
Trade names and other intangible assets 538,469
Other assets 3,985
Liabilities assumed
Accounts payable 36,560
Accrued expenses and other current liabilities 93,586
Deferred tax liabilities 181,789
Outstanding borrowings on credit facilities 166,850
Other long term liabilities 25,904
Bank overdrafts 5,584
Fair value of net assets 507,640
Goodwill 933,813
Total purchase price 1,441,453