LensCrafters 2013 Annual Report Download - page 143

For the analysis of the main changes occurred in the profit and loss in 2013 as compared to 2012 please refer to note 3
of the management report “Financial Results”.
28. COMMITMENTS AND RISKS
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% to 14% 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% and 10% 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, 2013 are detailed as follows
(amounts in thousands of Euro):
Year ending December 31
2014 99,643
2015 87,763
2016 71,691
2017 62,412
2018 53,912
Subsequent years 161,520
Total 536,941
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 2014 and 2026 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.
Total rental expense for each year ended December 31 is as follows:
(Amounts in thousands of Euro) 2013 2012
Minimum lease payments 359,479 360,082
Additional lease payments 126,400 99,377
Sublease payments (22,871)
(25,754)
Total 463,008
433,705
Future rental commitments, including contracted rent payments and contingent minimums, are as follows:
Year ending December 31
(Amounts in thousands of Euro)
2014 290,405
2015 247,900
2016 203,001