LensCrafters 2011 Annual Report Download - page 226

ANNUAL REPORT 2011> 150 |
On May 29, 2008, the Company entered into a Euro 250.0 million revolving credit
facility, guaranteed by its subsidiary, Luxottica US Holdings Corp. (“US Holdings”),
with Intesa Sanpaolo S.p.A., as agent, and Intesa Sanpaolo S.p.A., Banca Popolare di
Vicenza S.c.p.A. and Banca Antonveneta S.p.A., as lenders. The final maturity of the
credit facility is May 29, 2013. This revolving credit facility will require repayments of
equal quarterly installments of Euro 30.0 million of principal starting on August 29,
2011, with a repayment of Euro 40.0 million on the final maturity date of May 29, 2013.
Interest accrues at EURIBOR (as defined in the agreement) plus a margin between
0.40 percent and 0.60 percent based on the “Net Debt/EBITDA” ratio, as defined in
the agreement (1.925 percent as of December 31, 2011). As of December 31, 2011,
Euro 190.0 million was borrowed under this credit facility. The credit facility contains
certain financial and operating covenants. The Company was in compliance with those
covenants as of December 31, 2011.
In June and July 2009, the Company entered into eight interest rate swap transactions
with an aggregate initial notional amount of Euro 250.0 million with various banks
(“Intesa Swaps”). The Intesa Swaps will decrease their notional amount on a quarterly
basis, following the amortization schedule of the underlying facility, starting on August
29, 2011. These Intesa Swaps will expire on May 29, 2013. The Intesa Swaps were entered
into as a cash flow hedge on the Intesa Sanpaolo S.p.A. credit facility discussed above.
The Intesa Swaps exchange the floating rate of EURIBOR for an average fixed rate of
2.252 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 Euro (1.2)
million, net of taxes, is included in other comprehensive income as of December 31,
2011. Based on current interest rates and market conditions, the estimated aggregate
amount to be recognized as earnings from other comprehensive income for these
cash flow hedges in fiscal year 2012 is approximately Euro (0.5) million, net of taxes.
On November 11, 2009, the Company entered into a Euro 300 million Term Facility
Agreement, guaranteed by its subsidiaries US Holdings and Luxottica S.r.l., with
Mediobanca – Banca di Credito Finanziario S.p.A., as agent, and Mediobanca – Banca di
Credito Finanziario S.p.A., Deutsche Bank S.p.A., Calyon S.A. Milan Branch and Unicredit
Corporate Banking S.p.A., as lenders. The final maturity of the Term Facility was November
30, 2012 prior to the renegotiation discussed below. Interest accrued at EURIBOR (as
defined in the agreement) plus a margin between 1.75 percent and 3.00 percent based
on the “Net Debt/EBITDA” ratio. In November 2010, the Company renegotiated this
credit facility. The final maturity of the Term Facility is November 30, 2014. Interest accrues
at EURIBOR (as defined in the agreement) plus a margin between 1.00 percent and 2.75
percent based on the “Net Debt/EBITDA” ratio (2.520 percent as of December 31, 2011).
As of December 31, 2011, Euro 300.0 million was borrowed under this credit facility.
(b) On July 1, 2008, US Holdings closed a private placement of US$ 275 million senior
unsecured guaranteed notes (the “2008 Notes”), issued in three series (Series A, Series
B and Series C). The aggregate principal amounts of the Series A, Series B and Series C
Notes are US$ 20 million, US$ 127 million and US$ 128 million, respectively. The Series A
Notes mature on July 1, 2013, the Series B Notes mature on July 1, 2015 and the Series C
Notes mature on July 1, 2018. Interest on the Series A Notes accrues at 5.96 percent per