LensCrafters 2009 Annual Report Download - page 74

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> 72 | ANNUAL REPORT 2009
7. GOODWILL AND INTANGIBLE ASSETS - NET
The changes in the carrying amount of goodwill for the years ended December 31, 2009 and 2008, are as
follows (thousands of Euro):
Retail Wholesale Oakley Total
Balance as of January 1, 2008 1,355,697 338,941 907,202 2,601,840
Acquisitions (a) 24,192 6,914 31,106
Adjustments on previous acquisitions (a) 241,238 695,787 (907,202) 29,823
Change in exchange rates (b) 6,629 25,376 32,005
Balance as of December 31, 2008 1,627,756 1,067,018 2,694,774
Acquisitions (a) 1,812 3,568 5,380
Adjustments on previous acquisitions (a) (1,731) (1,731)
Change in exchange rates (b) 36,872 (35,092) 1,780
Balance as of December 31, 2009 1,664,709 1,035,494 2,700,203
(a) Goodwill acquired in 2008 in the retail distribution segment mainly consists of the acquisition of OHL. Goodwill acquired in 2008 in the manufacturing and
wholesale distribution segment mainly consists of the acquisition of the additional 17.7% of the net equity of the Indian subsidiary. The adjustments on previous
acquisitions mainly refer to the fi nalization of the Oakley fair value analysis. Oakley goodwill was allocated to the manufacturing and wholesale distribution and retail
segments in 2008.
(b) Certain goodwill balances are denominated in currencies other than Euro (the reporting currency) and, as such, balances may fl uctuate due to changes in
exchange rates.
Intangible assets-net consist of the following (thousands of Euro):
2009 2008
Gross carrying
amount
Accumulated
depreciation Total
Gross carrying
amount
Accumulated
depreciation Total
Tradenames and Trademarks (a) 1,330,309 (457,603) 872,706 1,318,737 (394,612) 924,125
Customer relation, contracts and list (b) 210,508 (34,390) 176,118 215,868 (20,206) 195,662
Distributor Network (b) 78,278 (18,004) 60,274 81,086 (15,179) 65,907
Franchise Agreements (b) 20,025 (4,760) 15,265 20,619 (3,870) 16,749
Other (c) 57,124 (24,713) 32,411 51,490 (19,903) 31,587
Total 1,696,244 (539,470) 1,156,774 1,687,800 (453,770) 1,234,030
(a) Trade names includes various trade names and trademarks acquired with the acquisitions of LensCrafters, Sunglass Hut International, OPSM, Cole and Oakley.
Trade names are amortized on a straight-line basis over a period of 25 years (except for the Ray-Ban trade names, which are amortized over a period of 20 years), as
the Company believes these trade names to be fi nite-lived assets. The weighted average amortization period is 24 years.
(b) Distributor network, customer relation contracts and lists, and franchise agreements were identifi able intangibles recorded in connection with the acquisition of
Cole in 2004 and of Oakley in 2007. These assets have fi nite lives and are amortized on a straight-line basis or on an accelerated basis (projected diminishing cash
fl ows) over periods ranging between 3 and 25 years. The weighted average amortization period is 20.6 years.
(c) Other identifi able intangibles have fi nite lives ranging between 3 and 17 years and are amortized on a straight line basis. The weighted average amortization
period is 11.3 years. Most of these useful lives were determined based on the terms of license agreements and non-compete agreements.
Certain intangible assets are maintained in currencies other than Euro (the reporting currency) and, as such,
balances may fl uctuate due to changes in exchange rates.