LensCrafters 2012 Annual Report Download - page 200

ANNUAL REPORT 2012> 114 |
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. Revenue includes 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.
Revenues received for the shipping and handling of goods are included in sales and the
costs associated with shipments to customers are included in operating expenses.
Retail Division revenues are recognized upon receipt by the customer at the retail location.
In some countries, the Group allows retail customers to return goods for a period of time
and, as such, the Group records an accrual for the estimated amounts to be returned.
This accrual is based on the historical return rate as a percentage of net sales and the
timing of the returns from the original transaction date. There are no other post-shipment
obligations. Additionally, the Retail Division enters into discount programs and similar
relationships with third parties that have terms of twelve or more months. Revenues
under these arrangements are recognized upon receipt of the products or services by
the customer at the retail location. For internet and catalogue sales, advance payments
and deposits from customers are not recorded as revenues until the product is delivered.
The Retail Division also includes managed vision care revenues consisting of both fixed
fee and fee-for-service managed vision care plans. For fixed-fee-plans, the plan sponsor
pays the Group a monthly premium for each enrolled subscriber. Premium revenue is
recognized as earned during the benefit coverage period. Premiums are generally billed in
the month of benefit coverage. Any unearned premium revenue is deferred and recorded
within other current liabilities on the consolidated statement of financial position. For
fee for service plans, the plan sponsor pays the Company a fee to process its claims.
Revenue is recognized as the services are rendered. This revenue is presented as third
party administrative services revenue. For these programs, the plan sponsor is responsible
for funding the cost of claims. Accruals are established for amounts due under these
relationships estimated to be uncollectible.