LensCrafters 2008 Annual Report Download - page 83

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terms of this amendment and transfer agreement, among other things, reduced the total facility
amount from US$ 500.0 million to US$ 150.0 million, effective on July 1, 2008, and provided for a final
maturity date that is 18 months from the effective date of the agreement. From July 1, 2008, interest
accrues at LIBOR (as defined in the agreement) plus 0.60 percent (4.6525 percent as of December
31,2008). As of December 31, 2008 US$ 150.0 million was borrowed under this facility.
Long-term debt, including capital lease obligations, matures in the years subsequent to December 31,
2008 as follows (thousands of Euro):
10. EMPLOYEE BENEFITS
Liability for Termination Indemnities. With regards to staff leaving indemnities (“TFR”), Italian law
provides for severance payments to employees upon dismissal, resignation, retirement of other
termination of employment. TFR, through December 31, 2006, was considered an unfunded defined
benefit plan. Therefore, through December 31, 2006, the Company accounted for the defined benefit plan
in accordance with EITF 88-1, “Determination of Vested Benefit Obligation for a Defined Benefit Pension
Plan,” using the option to record the vested benefit obligation, which is the actuarial present value of the
vested benefits to which the employee would be entitled if the employee retired, resigned or were
terminated as of the date of the financial statements..
Effective January 1, 2007, the TFR system was reformed, and under the new law, employees are given the
ability to choose where the TFR compensation is invested, whereas such compensation otherwise would
be directed to the National Social Security Institute or Pension Funds. As a result, contributions under the
reformed TFR system are accounted for as a defined contribution plan. The liability accrued until
December 31, 2006 continues to be considered a defined benefit plan, therefore each year, the Company
adjusts its accrual based upon headcount and inflation and excluding the changes in compensation level.
There are also some termination indemnities in other countries which are provided through payroll tax and
other social contributions in accordance with local statutory requirements. The related charges to earnings
for the years ended December 31, 2008, 2007 and 2006 were Euro 17.9 million, Euro 15.4 million and Euro
12.9 million respectively.
Qualified Pension Plans. During fiscal years 2008, 2007, and 2006, the Company continued to sponsor a
qualified noncontributory defined benefit pension plan, the Luxottica Group Pension Plan (“Lux Plan”),
which provides for the payment of benefits to eligible past and present employees of the Company upon
retirement. Pension benefits are accrued based on length of service and annual compensation under a
cash balance formula.
The Lux Plan was amended effective January 1, 2006, granting eligibility to associates who work in the Cole
Vision stores, field management, and the related labs and distribution centers. Additionally, the Company
amended the pension accrual formula for the Cole associates, as well as all new hires for the Company.
The new formula has a more gradual benefit accrual pattern and incorporates changes to the vesting
schedule as required by the Pension Plan Protection Act of 2006.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS |81 <
Years ended December 31
2009 286,213
2010 260,601
2011 257,978
2012 511,564
2013 1,305,686
Thereafter 183,460
Total 2,805,502