Polo, Luxottica in Glasses Pact

The sides want to sell sunglasses.
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Polo Ralph Lauren

(RL) - Get Report

announced Monday it has entered into a long-term licensing agreement with

Luxottica Group

(LUX)

for the design, production and worldwide distribution of prescription frames and sunglasses under the Polo Ralph Lauren brand.

The agreement is effective Jan. 1, 2007, and the new collection will be available early 2007, the company said.

The license agreement entails a minimum royalty guarantee of about $200 million, which will be prepaid on Jan. 1, 2007. This initial payment is the discounted present value of the guaranteed minimum royalty over the life of the contract. This amount will be amortized as royalty income over the life of the agreement.

This deal is estimated to fetch Luxottica Group in excess of $1.75 billion in sales over its duration.

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