ANNUAL REPORT 2004 - Luxottica Group

Excluding current maturities, long-term debt matures in
the years subsequent to December 31, 2005 as
follows:
In thousands of Euro
Years ended December 31
2006
2007
2008
2009
2010
Thereafter
Total
9. EMPLOYEE BENEFITS
LIABILITY FOR TERMINATION INDEMNITIES
104,777
260,427
357,003
546,263
8,568
457
1,277,495
The liability for termination indemnities represents
amounts accrued for employees in Australia, Austria,
Greece, Israel, Italy and Japan, determined in
accordance with labour laws and labour agreements
in each respective country. Each year, the Company
adjusts its accrual based upon headcount, changes in
compensation level and inflation. This liability is not
funded. Therefore, the accrued liability represents the
amount that would be paid if all employees were to
resign or be terminated as of the balance sheet date.
This treatment is in accordance with SFAS No. 112,
Employers’ Accounting for Post Employment Benefits,
which requires employers to expense the cost of
benefits paid before retirement (i.e. severance) over
the service lives of employees. The charge to earnings
during the years ended December 31, 2002, 2003
and 2004 aggregated Euro 5.7 million, Euro 12.5
million and Euro 10.4 million, respectively.
QUALIFIED PENSION PLAN
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During fiscal years 2003 and 2004, U.S. Holdings
sponsors a qualified noncontributory defined benefit
pension plan which provides for the payment of
benefits to eligible past and present employees of
U.S. Holdings upon retirement. Pension benefits are
accrued based on length of service and annual
compensation under a cash balance formula. As of
December 31, 2004, associates that work for the
acquired Cole businesses and legal entities were not
eligible to participate in the above mentioned pension
plan.
As of the effective date of the Cole acquisition, U.S.
Holdings, through its newly acquired subsidiary
sponsors the Cole National Group, Inc. Retirement
Plan. This is a qualified noncontributory defined benefit
pension plan that covers Cole employees who have
met eligibility service requirements and are not
members of certain collective bargaining units. The
pension plan provides for benefits to be paid to
eligible employees at retirement based primarily upon
years of service and the employees’ compensation
levels near retirement. In January 2002, this plan was
frozen for all participants. The average pay for all
participants was frozen as of March 31, 2002 and
covered compensation was frozen on December 31,
2001. Benefit service was also frozen as of March 31,
2002 except for those individuals who were at least
age 50 with at least ten years of benefit service as of
that date, whose service will continue to increase as
long as they remain employed by U.S. Holdings or
one of its subsidiaries.
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