LensCrafters 2010 Annual Report Download - page 133

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NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting
period less the fair value of plan assets, together with adjustments for unrecognized past–service costs. The defined
benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present
value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest
rates of high–quality corporate bonds that are denominated in the currency in which the benefits will be paid and that
have terms to maturity approximating the terms of the related pension obligation.
Actuarial gains and losses due to changes in actuarial assumptions or to changes in the plan’s conditions are recognized
as incurred in the consolidated statement of comprehensive income.
For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans
on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have
been paid. The contributions are recognized as employee benefit expenses when they are due. Prepaid contributions are
recognized as an assets to the extent that a cash refund or a reduction in the future payments is available.
Provisions for risks
Provisions for risks are recognized when:
the Group has a present obligation legal or constructive as a result of a past event;•
it is probable that the outflow of resources will be required;•
the amount of the obligation can be reliably estimated.•
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using
a pre–tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation.
The increase in the provision due to passage of time is recognized as interest expense.
Share–based payments
The Company operates a number of equity–settled, share–based compensation plans, under which the entity receives
services from employees as consideration for equity instruments (options). The fair value of the employee services received
in exchange for the grant of the options is recognized as an expense. The total amount to be expensed is determined by
reference to the fair value of the options granted.
The total expense is recognized over the vesting period, which is the period over which all of the specified vesting
conditions are to be satisfied. At the end of each reporting period, the Company revises its estimates of the number of
options that are expected to vest based on the non–market vesting conditions. It recognizes the impact of the revision to
original estimates, if any, in the consolidated statement of income, with a corresponding adjustment to equity.
Recognition of revenues
Revenue is recognized in accordance with IAS 18 – Revenue. Revenues include sales of merchandise (both wholesale
and retail), insurance and administrative fees associated with the Group’s managed vision care business, eye exams and
related professional services, and sales of merchandise to franchisees along with other revenues from franchisees such as
royalties based on sales and initial franchise fee revenues.
Wholesale Division revenues are recognized from sales of products at the time of shipment, as title and the risks and
rewards of ownership of the goods are assumed by the customer at such time. The products are not subject to formal
customer acceptance provisions. In some countries, the customer has the right to return products for a limited period
of time after the sale. However, such right of return does not impact the timing of revenue recognition. Accordingly,
the Group records an accrual for the estimated amounts to be returned. This estimate is based on the Group’s right of
return policies and practices along with historical data and sales trends. There are no other post–shipment obligations.