LensCrafters 2008 Annual Report Download - page 73

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Optics India LTD (“RBSO”). Effective upon the entry of the shares tendered in the offer into the share
register on June 26, 2007 the Company increased its ownership interest in RBSO to 70.5 percent. As of such
date, RBSO was consolidated into the financial statements. The total cost of the shares acquired was
approximately Euro 13 million (US$ 17.2 million). The Company recorded the acquisition as a “step-
acquisition” and allocated the purchase price paid over the newly acquired proportional share of the fair
value of RBSO assets and liabilities acquired. There were no substantial unrecognized intangibles, and as
such, goodwill was recorded for the excess price paid over the net fair values of assets and liabilities of
approximately Euro 9.1 million (US$ 12.3 million). During 2008, the Company made a delisting offer to the
remaining public shareholders of RBSO pursuant to India’s delisting guidelines. Through this process the
public shareholders tendered 4,335,713 shares for approximately Euro 9.1 million (US$ 13.4 million,
including approximately US$ 0.5 million in transaction costs). As of December 31, 2008 the Company owned
88.2% of RBSO and the transaction increased goodwill by approximately Euro 5.0 million (US$ 7.8 million).
In March 2007 the Company announced that it had acquired two prominent specialty sun chains in South
Africa, with a total of 65 stores. The two acquisitions represent an important step in the expansion of the
Company’s sun retail presence worldwide. Luxottica Group’s total investment in the two transactions was
approximately Euro 10 million. The Company used various methods to calculate the fair value of the assets
acquired and liabilities assumed. The excess of the purchase price over net assets acquired (“goodwill”)
has been recorded in the accompanying consolidated balance sheet. All valuations have been completed
during 2008 with no material differences from the purchase price allocation done in 2007 which resulted in
the recognition of goodwill of Euro 8.3 million as of the date of acquisition.
On July 1, 2006, the Company acquired certain assets and assumed certain liabilities from King Optical
Group Inc. consisting of its 74 Canadian optical store chain known as Shoppers Optical (“SO”). The
aggregate consideration paid by the Company to the former owners of SO was approximately Canadian
dollar (“CDN$”) 68.8 million (Euro 48.3 million) in cash. In connection with the acquisition, the Company
assumed no indebtedness. The purchase price of CDN$ 69.3 million (Euro 48.7 million), including
approximately CDN$ 0.1 million (Euro 0.4 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. All
valuations of net assets including but not limited to fixed assets and inventory have been completed during
2007 resulting in no material differences from the purchase price allocation done in 2006. The acquisition
was made as a result of the Company’s strategy to continue expansion of its retail business in Canada.
In May 2006, the Company completed the purchase of the remaining 49% stake of the Turkish-based
distributor Luxottica Industri VE Ticaret Anonim (“Luxottica Turchia”) for an amount of Euro 15 million.
Goodwill of Euro 7.0 million representing the excess of the net assets acquired has been recorded in the
accompanying Consolidated Balance Sheets. In November 2006 Standard Gozluk Industri Ve Ticaret A.S.
(“Standard”), a Turkish wholesaler fully owned by the former minority shareholders of Luxottica Turchia,
merged with Luxottica Turchia. As a result of the merger the former shareholders of Standard received a
minority stake of Luxottica Turchia of 35.16% and a put option to sell the shares to the Company, while the
Company was granted a call option on the minority stake. The acquisition was accounted for in accordance
with SFAS 141 and, accordingly, the total consideration of Euro 46.7 million has been allocated to the fair
market value of the assets and liabilities of the company at the acquisition date. All valuations of net assets
including but not limited to fixed assets and inventory have been completed during 2007 resulting in the
recognition of intangible assets of approximately Euro 19.6 million and related deferred tax liabilities for
approximately Euro 3.9 million and in the reduction of the goodwill recognized in 2006 by approximately
Euro 15.7 million. The acquisition was made as a result of the Company’s strategy to continue expansion
of its wholesale business in Turkey, in particular in the prescription frames market.
In November 2006, the Company completed the acquisition, which was announced in June 2006, of
Modern Sight Optics, a leading premium optical chain that operates a total of 28 stores in Shanghai,
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS |71 <