LensCrafters 2010 Annual Report Download - page 161

|159 >
NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
the tests indicated that the cash flow hedges are highly effective. As a consequence, approximately US$ (22) million,
net of taxes, is included in other comprehensive income as of December 31, 2010. Based on current interest rates and
market conditions, the estimated aggregate amount to be recognized in earnings from other comprehensive income
for these cash flow hedges in fiscal 2011 is approximately US$ (13.5) million, net of taxes.
During the fourth quarter of 2008 and the first quarter of 2009, US Holdings entered into 14 interest rate swap
transactions with an aggregate initial notional amount of US$ 700 million with various banks (“Tranche D Swaps”),
which will start to decrease by US$ 50 million every three months beginning on April 12, 2011. The final maturity of
these swaps will be October 12, 2012. The Tranche D Swaps were entered into as a cash flow hedge on Facility D of
the credit facility discussed above. The Tranche D Swaps exchange the floating rate of LIBOR for an average fixed
rate of 2.423 percent per annum. The ineffectiveness of cash flow hedges was tested at the inception date and at least
every three months. The results of the tests indicated that the cash flow hedges are highly effective. As a consequence,
approximately US$ (12.2) million, net of taxes, is included in other comprehensive income as of December 31, 2010.
Based on current interest rates and market conditions, the estimated aggregate amount to be recognized in earnings
from other comprehensive income for these hedges in fiscal 2011 is approximately US$ (8.5) million, net of taxes.
The short–term bridge loan facility was for an aggregate principal amount of US$ 500 million. Interest accrued on the
short–term bridge loan at LIBOR (as defined in the facility agreement) plus 0.15 percent. The final maturity of the credit
facility was eight months from the first utilization date. On April 29, 2008, the Company and US Holdings entered into an
amendment and transfer agreement to this short–term bridge loan facility. The terms of this amendment and transfer
agreement, among other things, reduced the total facility amount from US$ 500 million to US$ 150 million, effective on
July 1, 2008, and provided for a final maturity date that was 18 months from the effective date of the agreement. From
July 1, 2008, interest accrued at LIBOR (as defined in the facility agreement) plus 0.60 percent. On November 27, 2009, the
Company and US Holdings amended the US$ 150 million short–term bridge loan facility to, among other things, reduce
the total facility amount from US$ 150 million to US$ 75 million effective November 30, 2009, and provide for a final maturity
date of November 30, 2011. The new terms also provided for the repayment of US$ 25 million on November 30, 2010 and
the remaining principal at the final maturity date. From November 30, 2009, interest accrued at LIBOR (as defined in the
facility agreement) plus 1.90 percent. US Holdings prepaid US$ 25 million on September 8, 2010 and the remaining US$ 50
million on October 12, 2010. As of December 31, 2010 this credit facility had been repaid in full.
The fair value of long–term payables as of December 31, 2010 was equal to Euro 2,629.2 million. The fair value of
the debts was equal to the present value of future cash flows, calculated by utilizing the market rate that is currently
available for similar debt and modified in order to take into account the credit rating of the Company.
As of December 31, 2010, the Group had unused committed (revolving) credit lines for Euro 875 million.
(e) Other loans consist of several small credit agreements which are not material.
Long–term debt, including capital lease obligations, as of December 31, 2010 matures as follows:
Years ended December 31 (thousands of Euro)
2011 197,566
2012 521,958
2013 690,736
2014 300,257
2015 and subsequent years 921,808
Effect deriving from the adoption of the amortized cost method 312
Total 2,632,637