LensCrafters 2008 Annual Report Download - page 80

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>78 |ANNUAL REPORT 2008
hedges was tested at the inception date and throughout the year. The results of the tests indicated that
the cash flow hedges were highly effective prior to the swap expiration date of September 2008.
In December 2005, the Company entered into an unsecured credit facility with Banca Popolare di
Verona e Novara Soc. Coop. a R.L (LLC). The 18-month credit facility consisted of a revolving loan that
provided borrowing availability of up to Euro 100.0 million. Amounts borrowed under the revolving
portion could be borrowed and repaid until final maturity. The final maturity of the credit facility was
June 1, 2007. The Company repaid the outstanding amount on the maturity date with the proceeds of
anew unsecured credit facility with Banca Popolare di Verona e Novara Soc. Coop. a R.L. The new 18-
month credit facility consisted of a revolving loan that provided borrowing availability of up to Euro
100.0 million. Amounts borrowed under the revolving portion could be borrowed and repaid until final
maturity.Interest accrued on the revolving loan at Euribor (as defined in the agreement) plus 0.25
percent. The Company could select interest periods of one, three or six months. The credit facility
expired on December 3, 2008 and the credit facility was repaid in full.
In April 2008, the Company entered into a new Euro150.0 million unsecured credit facility with Banca
Nazionale del Lavoro. This facility is an 18-month revolving credit facility that provides borrowing
availability of up to Euro 150.0 million. The amounts borrowed under the revolving facility can be
borrowed and repaid until final maturity. Interest accrues at EURIBOR plus 0.375 percent (3.604 percent
as of December 31, 2008). The Company can select interest periods of one, three or six months. The
final maturity of the credit facility is October 8, 2009. As of December 31, 2008 Euro 150.0 million was
borrowed under this facility.
On May 29, 2008, the Company entered into a Euro 250.0 million revolving credit facility, guaranteed
by its subsidiary, Luxottica US Holdings Corp. (“ USHoldings” ), with Intesa Sanpaolo S.p.A., as agent,
and Intesa Sanpaolo S.p.A., Banca Popolaredi Vicenza S.c.p.A. and Banca Antonveneta S.p.A., as
lenders. The final maturity of the credit facility is May 29, 2013. The credit facility will require repayment
of equal quarterly installments of Euro 30.0 million of principal starting on August 29, 2011, and a
repayment of Euro 40.0 million on the final maturity date. Interest accrues at EURIBOR (as defined in
the agreement) plus a margin between 0.40 percent and 0.60 percent based on the “ Net
Debt/EBITDA” ratio, as defined in the agreement (3.741 percent as of December 31, 2008). As of
December 31, 2008 Euro 250.0 million was borrowed under this credit facility.
(b)On September 3, 2003, US Holdings closed a private placement of US$ 300 million (Euro 215.5 million
at the exchange rate as of December 31, 2008) of senior unsecured guaranteed notes (the “ Notes” ),
issued in three series (Series A, Series B and Series C). Interest on the Series A Notes accrued at 3.94
percent per annum and interest on Series B and Series C Notes accrues at 4.45 percent per annum. The
Series A and Series B Notes matured on September 3, 2008 and the Series C Notes mature on
September 3, 2010. The Series A and Series C Notes require annual repayments beginning on
September 3, 2006 through the applicable dates of maturity.The Notes are guaranteed on a senior
unsecured basis by the Company and Luxottica S.r.l., a wholly owned subsidiary. The Notes contain
certain financial and operating covenants. US Holdings was in compliance with those covenants as of
December 31, 2008. In December 2005, US Holdings terminated three interest rate swaps that
coincided with the Notes and, as such, the final adjustment to the carrying amount of the hedged
interest-bearing financial instruments is being amortized as an adjustment to the fixed-rate debt yield
over the remaining life of the debt. The effective interest rate on the Series C Notes outstanding as
December 31, 2008, is 5.44 percent for its remaining life. Amounts outstanding under these Notes were
Euro15.6 million and Euro 97.9 million as of December 31, 2008 and 2007, respectively.
On July 1, 2008, US Holdings closed a private placement of US$ 275 million senior unsecured
guaranteed notes (the “ 2008 Notes” ), issued in three series (Series A, Series B and Series C). The principal