Annual Review 2012 - Luxottica
Annual Review 2012 - Luxottica
Annual Review 2012 - Luxottica
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
114 |<br />
ANNUAL REPORT <strong>2012</strong><br />
The total expense is recognized over the vesting period, which is the period over which all<br />
of the specified vesting conditions are to be satisfied. At the end of each reporting period,<br />
the Company revises its estimates of the number of options that are expected to vest<br />
based on the non-market vesting conditions. It recognizes the impact of the revision to<br />
original estimates, if any, in the consolidated statement of income, with a corresponding<br />
adjustment to equity.<br />
Recognition of revenues<br />
Revenue is recognized in accordance with IAS 18 - Revenue. Revenue includes sales of<br />
merchandise (both wholesale and retail), insurance and administrative fees associated with<br />
the Group’s managed vision care business, eye exams and related professional services,<br />
and sales of merchandise to franchisees along with other revenues from franchisees such<br />
as royalties based on sales and initial franchise fee revenues.<br />
Wholesale Division revenues are recognized from sales of products at the time of shipment,<br />
as title and the risks and rewards of ownership of the goods are assumed by the customer<br />
at such time. The products are not subject to formal customer acceptance provisions.<br />
In some countries, the customer has the right to return products for a limited period of<br />
time after the sale. However, such right of return does not impact the timing of revenue<br />
recognition. Accordingly, the Group records an accrual for the estimated amounts to<br />
be returned. This estimate is based on the Group’s right of return policies and practices<br />
along with historical data and sales trends. There are no other post-shipment obligations.<br />
Revenues received for the shipping and handling of goods are included in sales and the<br />
costs associated with shipments to customers are included in operating expenses.<br />
Retail Division revenues are recognized upon receipt by the customer at the retail location.<br />
In some countries, the Group allows retail customers to return goods for a period of time<br />
and, as such, the Group records an accrual for the estimated amounts to be returned.<br />
This accrual is based on the historical return rate as a percentage of net sales and the<br />
timing of the returns from the original transaction date. There are no other post-shipment<br />
obligations. Additionally, the Retail Division enters into discount programs and similar<br />
relationships with third parties that have terms of twelve or more months. Revenues<br />
under these arrangements are recognized upon receipt of the products or services by<br />
the customer at the retail location. For internet and catalogue sales, advance payments<br />
and deposits from customers are not recorded as revenues until the product is delivered.<br />
The Retail Division also includes managed vision care revenues consisting of both fixed<br />
fee and fee-for-service managed vision care plans. For fixed-fee-plans, the plan sponsor<br />
pays the Group a monthly premium for each enrolled subscriber. Premium revenue is<br />
recognized as earned during the benefit coverage period. Premiums are generally billed in<br />
the month of benefit coverage. Any unearned premium revenue is deferred and recorded<br />
within other current liabilities on the consolidated statement of financial position. For<br />
fee for service plans, the plan sponsor pays the Company a fee to process its claims.<br />
Revenue is recognized as the services are rendered. This revenue is presented as third<br />
party administrative services revenue. For these programs, the plan sponsor is responsible<br />
for funding the cost of claims. Accruals are established for amounts due under these<br />
relationships estimated to be uncollectible.