LensCrafters 2012 Annual Report Download - page 252

ANNUAL REPORT 2012> 166 |
The reconciliation between the Italian statutory tax rate and the effective rate is shown
below:
As of December 31,
2012 2011
Italian statutory tax rate 31.4% 31.4%
Aggregate effect of different tax rates in foreign jurisdictions 3.3% 2.4%
Accrual for tax inspection on Luxottica S.r.l. (fiscal year 2007) 1.2% -
Aggregate other effects 0.4% 0.3%
Effective rate 36.3% 34.1%
For the analysis of the main changes in the 2012 Income statement items versus 2011, refer
to paragraph 3. Financial results of the Management report.
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 alteration 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, 2012 are
detailed as follows:
Years ending December 31 (thousands of Euro)
2013 98,036
2014 89,252
2015 81,970
2016 67,181
2017 57,451
Subsequent years 211,424
Total 605,314
28. COMMITMENTS
AND RISKS