LensCrafters 2009 Annual Report Download - page 104

Download and view the complete annual report

Please find page 104 of the 2009 LensCrafters annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 128

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128

> 102 | ANNUAL REPORT 2009
Texas LensCrafters Class Action Lawsuit
In May 2008, two individual optometrists commenced an action against LensCrafters, Inc. (now Luxottica
Retail North America Inc.) and Luxottica Group S.p.A. in the United States District Court for the Eastern
District of Texas, alleging violations of the Texas Optometry Act ("TOA") and the Texas Deceptive Trade
Practices Act, and tortious interference with customer relations. The suit alleges that LensCrafters has
attempted to control the optometrists’ professional judgment and that certain terms of the optometrists’
sub-lease agreements with LensCrafters violate the TOA. The suit seeks recovery of a civil penalty of up to
US$ 1,000 for each day of a violation of the TOA, injunctive relief, punitive damages, and attorneys’ fees
and costs. In August 2008, plaintiffs filed a first amended complaint, adding claims for fraudulent induce-
ment and breach of contract. In October 2008, plaintiffs filed a second amended complaint seeking to
certify the case as a class action on behalf of all current and former LensCrafters’ sub-lease optometrists.
Luxottica Group S.p.A. filed a motion to dismiss for lack of personal jurisdiction in October 2008. The court
did not address that motion. The case was transferred to the Western District of Texas, Austin Division, in
January 2009, pursuant to the defendants’ motion to transfer venue. On January 11, 2010, plaintiffs filed a
motion requesting that the court permit the case to proceed as a class action on behalf of all optometrists
who sublease from Lenscrafters in Texas.
On February 8, 2010, the parties reached an agreement to settle the litigation on confidential terms. On
March 8, 2010, the court dismissed the case with prejudice. Amounts paid to settle this litigation will not
be material. Costs associated with the litigation for the years ended December 31, 2009 and 2008 were not
material.
Other
The Company is a defendant in various other lawsuits arising in the ordinary course of business. It is the
opinion of the management of the Company that it has meritorious defenses against all such outstanding
claims, which the Company will vigorously pursue, and that the outcome of such claims, individually or in
the aggregate, will not have a material adverse effect on the Company’s consolidated financial position or
results of operations.
16. FAIR VALUES
Certain assets and liabilities of the Company are recorded at fair value on a recurring basis while others are
recorded at fair value based on specific events. ASC No. 820, Fair Value Measurements and Disclosures,
specifies a hierarchy of valuation techniques consisting of three levels:
• Level1-Inputsarequotedpricesinanactivemarketforidenticalassetsorliabilities
• Level2-Inputsarequotedforsimilarassetsorliabilitiesinanactivemarket,quotedpricesforidenti-
cal or similar assets and liabilities in markets that are not active, inputs other than quoted prices that
are observable (for example interest rates and yield curves observable at common quoted intervals) or
market-corroborated inputs
• Level3-Unobservableinputsusedwhenobservableinputsarenotavailableinsituationswherethereis
little, if any market activity for the asset or liability