New Look Eyewear Inc. Development Background
New Look Eyewear Inc. (“New Look”) results from the conversion of the Fund to a corporation on March 2, 2010 pursuant to an arrangement governed by the Canada Business Corporations Act. For accounting purposes, New Look is the successor of the Benvest New Look Income Fund, including its subsidiary also named New Look Eyewear Inc.
In the following background summary, New Look describes both the former and the current corporation.
During the year ended December 31, 2006, New Look invested $5.7 million in its network expansion plan. New Look proceeded with the opening of five new stores in the greater Montréal area, two in the Ottawa area and one in the Québec City area and relocated and increased the size of its store in Drummondville. In addition, major renovations were undertaken in four stores. Important investments were made in the laboratory with the introduction of “hydro satin” coating technology and digital lens manufacturing technology. Hydro satin processing has allowed New Look to sell a value-added coating for its lenses. The installation of equipment and software related to digital manufacturing, as well as the training of personnel, set the groundwork for the launch of certain revolutionary products at the beginning of 2007. Financing of the expansion was provided partly from the receipt of an amount of $2.3 million from the CMN Escrowed Sale Proceeds.
The sale of Evolution HD TM and Ultra Evolution HD TM lenses, revolutionary products, began in January 2007. During the year ended December 31, 2007, New Look invested a further $7.4 million in its expansion plan. New Look proceeded with the opening of four additional stores in Montréal (including the acquisition of two optical practices) and one additional store in Ottawa. In addition, major renovations were undertaken in nine stores. Robotized equipment was added in the laboratory; optical and ophthalmic equipment was updated in many stores; and New Look began to implement an Enterprise Resource Planning (“ERP”) system. These investments were partly financed through long-term borrowings of $4.5 million. Long-term financing came mainly from the “evergreen” credit facilities with its regular bank.
During the 2008 fiscal year, New Look added four stores to its network, including a store in Ottawa and an optical practice acquired in Joliette, and proceeded with the relocation of and/or major renovations to seven existing stores. Investments were also made in additional equipment in the laboratory, optical and ophthalmic equipment in stores and with respect to the second phase of the implementation of the ERP system. The ERP system is structured to facilitate the management of the business encompassing the ongoing growth. The investments were partly financed through long-term borrowings of $2.3 million on the “evergreen” credit facilities.
During the 2009 fiscal year, New Look added two new stores to the network, one in the greater Montréal area and one in Ottawa. New Look also acquired the remaining 50% interest in Monique Laurent Inc., a former joint venture which already operated two New Look stores. Investments were also made to acquire clientele, to proceed with major renovations to four stores and add equipment in the laboratory and in the stores.
The Benvest New Look Income Fund and New Look came to an agreement governed by the Canada Business Corporations Act with Sonomax Hearing Health Inc., in which the Fund converted to a corporation. The agreement was completed on March 2, 2010. New Look shares replaced Fund units at the Toronto Stock Exchange. Also, with this transaction, New Look acquired exclusive distribution rights on products formerly distributed by Sonomax Hearing Health Inc. with the objective of using the eyewear infrastructures and the retail network to sell and fit the product into the clients’ ears.
During the 2010 fiscal year, other investments of New Look consisted mainly in opening a store in Valleyfield, Québec, acquiring a practice in Drummondville, Québec, and adding a second HD production line in its laboratory. The corporate web site has been revamped and now comprises web based appointment requests for eye exams and requests for renewals of contact lens purchases.
During the 2011 financial year, New Look added three new stores to the network, one in Sorel-Tracy, one is Sept-Iles and one in Ottawa’s St-Laurent Shopping Centre. New Look also acquired optical practices in Cap-de-la-Madeleine, Drummondville and Montréal, ending the year with 68 stores in the Province of Québec and Ottawa. Continuous investments were made in the laboratory equipment and the relocation or renovations of stores. The capital expenditures amounted to $6 million, 90% of which were financed through cash generated by operating activities while the net debt decreased by $3.0 million. New Look adopted the International Financial Reporting Standards (“IFRS”) with retrospective application to January 1, 2010. The adoption of IFRS caused an increase in the carrying value of New Look’s equity of $6,731,000.
During the first two quarters of 2012, New Look acquired two optical practices in the Montreal area and the building housing the laboratory, the distribution center and administrative offices in Ville Saint-Laurent.