v2.4.0.6
Fair value measurements
 12 Months Ended
Dec. 31, 2012
Fair value measurements
24. Fair value measurements

Financial Instruments and Their Fair Values

As of December 31, 2012 and 2011, the Company held certain financial assets that are measured at fair value on a recurring basis. These consisted of cash and cash equivalents. The monetary assets represented by these financial instruments are primarily located in Poland, Hungary and Russia. Consequently, they are subject to currency translation risk when reporting in U.S. dollars.

The Company does not have any financial assets measured at fair value on a recurring basis as Level 3. The Company has certain financial liabilities which are measured at fair value on recurring basis for disclosure purposes only, namely, Convertible Senior Notes, Secured Senior Notes and Debt Security. The fair value of Convertible Senior Notes and Secured Senior Notes is determined based on quoted market prices in public markets and is categorized as Level 1. Fair value of Debt Security is determined based on the principal face value and accrued interest and is categorized as Level 3. The fair value of Convertible Senior Notes, Secured Senior Notes and Debt Security as of December 31, 2012 and 2011 is disclosed in Note 13 “Borrowings.” There were no transfers in or out of Level 1, Level 2 or Level 3 during the years ended December 31, 2012 and 2011.

Non-financial assets and liabilities, such as goodwill, indefinite-lived trademarks and other long-lived assets, are accounted for at fair value on a non-recurring basis. These items are tested for impairment on the occurrence of a triggering event i.e. whenever significant events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an impairment exists, the long-lived asset is written down to its fair value. Refer to the Note 8, 9 and 10 for the carrying value of the Company’s long-lived assets and amount of recognized impairment.

The following table sets forth by level, within the fair value hierarchy, the Company’s financial assets accounted for at fair value on a recurring and non-recurring basis (cash and cash equivalents, goodwill, trademarks and customer relationships) as of December 31, 2012, and December 31, 2011:

 

            Fair value measurement on a recurring basis  
     Total      Quoted Prices in
Activated Markets
for Identical Assets
(Level 1)		      Significant Other
Observable Inputs
(Level 2)		      Unobservable
Inputs
(Level 3)		  

December 31, 2012

            

Cash and cash equivalents

    $ 84,729       $ 84,729       $ 0       $ 0   
December 31, 2011            

Cash and cash equivalents

    $ 94,410       $ 94,410       $ 0       $ 0   

 

            Fair value measurement on a non-recurring basis         
     Total      Quoted Prices in
Activated Markets
for Identical Assets
(Level 1)		      Significant Other
Observable Inputs
(Level 2)		      Unobservable
Inputs
(Level 3)		      Total loss  
December 31, 2012               

Trademarks and Customer Relationship (1)

    $ 174,242       $ 0       $ 0       $ 174,242       $ 45,052   

Goodwill (2)

    $ 213,629       $ 0       $ 0       $ 213,629       $ 327,847   
December 31, 2011               

Trademarks (3)

    $ 52,090       $ 0       $ 0       $ 52,090       $ 127,692   

Goodwill (4)

    $ 413,231       $ 0       $ 0       $ 413,231       $ 930,127   

 

(1) In 2012 trademarks and customer relationships with a carrying amount of $219.3 million were written down to their fair value of $174.2 million, resulting in an impairment charge of $45.1 million, which was included in earnings for the period.
(2) In 2012 goodwill with a carrying amount of $ 541.4 million was written down to its fair value of $213.6 million, resulting in an impairment charge of $327.8 million, which was included in earnings for the period.
(3) In 2011 trademarks with a carrying amount of $174.0 million (excluding currency translation adjustment of $5.8 million) were written down to their fair value of $52.1 million, resulting in an impairment charge of $127.7 million, which was included in earnings for the period.
(4) In 2011 goodwill with a carrying amount of $1,338.2 million (excluding currency translation adjustment of $5.1 million) was written down to its fair value of $413.2 million, resulting in an impairment charge of $930.1 million, which was included in earnings for the period.

 

The Company has other financial instruments, such as receivables, accounts payable, overdrafts, short term bank loans and other liabilities. Due to the short-term nature of these instruments, the carrying value approximate their fair values. The Company did not have any other financial instruments with the scope of the fair value disclosure requirements as of December 31, 2012 and 2011.