LensCrafters 2011 Annual Report Download - page 244

ANNUAL REPORT 2011> 168 |
The Company does not provide for an accrual for income taxes on undistributed earnings
of its non-Italian operations to the related Italian parent company that are intended to be
permanently invested. It is not practicable to determine the amount of income tax liability
that would result had such earnings actually been distributed. In connection with the 2011
earnings of certain subsidiaries, the Company has provided for an accrual for income taxes
related to declared dividends of earnings.
For further information on the changes occurred in 2011 as compared to 2010 please
refer to note 3 of the management report on the consolidated financial statements as of
December 31, 2011 “Financial Results”.
LICENSING AGREEMENTS
The Group has entered into licensing agreements with certain designers for the production,
design and distribution of sunglasses and prescription frames.
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.
Minimum payments required in each of the years subsequent to December 31, 2011 are
detailed as follows:
Years ending December 31 (thousands of Euro)
2012 65,003
2013 69,882
2014 53,108
2015 49,096
2016 23,723
Subsequent years 98,730
Total 359,542
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 2012 and 2026
and provide for renewal options under various conditions. The lease arrangements for the
Group’s US retail locations often include escalation clauses and provisions requiring the
payment of incremental rentals, in addition to any established minimums contingent upon
27. COMMITMENTS
AND RISKS