LensCrafters 2010 Annual Report Download - page 172

ANNUAL REPORT 2010> 170 |
Under these licensing agreements – which typically have terms ranging from 3 to 10 years – the Group is required to pay
a royalty generally ranging from 5 percent to 14 percent of net sales. Certain contracts also provide for the payment of
minimum annual guaranteed amounts and a mandatory marketing contribution (the latter typically amounts to between
5 percent and 10 percent of net sales). These agreements can typically be terminated early by either party for a variety
of reasons, including but not limited to non payment of royalties, failure to reach minimum sales thresholds, product
alternation and, under certain conditions, a change in control of Luxottica Group S.p.A.
On March 31, 2010, Luxottica Group announced a three–year renewal of its exclusive license agreement with Jones
Apparel Group for the design, production and worldwide distribution of prescription frames and sunglasses under the
Anne Klein New York brand. The new agreement extends the license through December 2012 with an option for further
renewal. The terms and conditions of this agreement are in line with the prior agreement.
On March 31, 2010, Luxottica Group announced a five–year extension of the license agreement for the design, production
and worldwide distribution of prescription frames and sunglasses under the Brooks Brothers brand. The new agreement
runs through December 2014 with an option for a further five–year extension under the same terms. The terms and
conditions of this Agreement are in line with the prior agreement.
On May 27, 2010, Luxottica Group announced a ten–year extension of the license agreement for the design, production
and worldwide distribution of prescription frames and sunglasses under the Bvlgari brand. The new agreement runs from
January 1, 2011 through December 31, 2020.
On October 5, 2010, Luxottica Group announced the signing of a license agreement for the design, manufacturing and
global distribution of sun and prescription eyewear under the Coach, Coach Poppy and Reed Krakoff brands beginning
January 1, 2012. Such agreement includes renewal options.
Minimum payments required in each of the years subsequent to December 31, 2010 are detailed as follows:
Years ending December 31 (thousands of Euro)
2011 69,938
2012 64,205
2013 56,924
2014 43,348
2015 35,969
Subsequent years 122,028
Total 392,412
Rentals, leasing and licenses
The Group leases through its worldwide subsidiaries various retail stores, plants, warehouses and office facilities as well
as certain of its data processing and automotive equipment under operating lease arrangements. These agreements
expire between 2011 and 2025 and provide for renewal options under various conditions. The lease arrangements for
the Group’s U.S. retail locations often include escalation clauses and provisions requiring the payment of incremental
rentals, in addition to any established minimums contingent upon the achievement of specified levels of sales volume. The
Group also operates departments in various host stores, paying occupancy costs solely as a percentage of sales. Certain
agreements which provide for operations of departments in a major retail chain in the United States contain short–term
cancellation clauses.