12. Intangible Assets other than Goodwill

The major components of intangible assets are:


Non-amortizable intangible assets:
Trademarks as at December 31, 2009	$	772,954
Impairment charge		(131,849	)
Acquisitions during the period		6,000
Foreign exchange impact		(19,884	)

Trademarks as at December 31, 2010	$	627,221

Amortizable intangible assets:
Customer relationships as at December 31, 2009		847
Acquisitions during the period		0
Less accumulated amortization		(694	)
Foreign exchange impact		(32	)

Customer relationships as at December 31, 2010		121

Total intangible assets as at December 31, 2010	$	627,342

Non-amortizable intangible assets:
Trademarks as at December 31, 2010	$	627,221
Impairment charge		(127,692	)
Acquisitions during the period		17,473
Foreign exchange impact		(59,621	)

Trademarks as at December 31, 2011		457,381

Amortizable intangible assets:
Customer relationships as at December 31, 2010		121
Acquisitions during the period		8,200
Less accumulated amortization		(1,139	)
Foreign exchange impact		(715	)

Customer relationships as at December 31, 2011		6,467

Total intangible assets as at December 31, 2011	$	463,848

Accumulated impairment related to trademarks as of December 31, 2011 and December 31, 2010 amounts to $279.8 million and $152.1 million, respectively.

Impairment test on trademarks performed as of September 30, 2011

As of September 30, 2011, the Company assessed recent events and current circumstances, including current and future performance, relaunch and rebranding plans in 2011 and 2012. Resulting from these events, the Company identified certain impairment indicators that would trigger the need for an impairment test, including performance of certain brands below expectations.

As of September 30, 2011 in order to support the value of trademarks, the Company calculated the fair value of trademarks using a discounted cash flow approach based on the following assumptions:

•

Risk free rates for Poland and Russia used for calculation of discount rate were based on the yield of long term bonds denominated in US dollars issued by Polish and Russian governments as of September 30, 2011. When estimating discount rates to be used for the calculation we have taken into account current market conditions in Poland and Russia separately. As a result of our assumptions and calculations, we have determined discount rates of 9.09% and 11.03% for Poland and Russia, respectively. These inputs were determined utilizing Level 1 inputs.

•

The Company estimated the growth rates in projecting cash flows for each of our trademarks separately, based on four year plan assumptions related to each trademark. These inputs were determined utilizing Level 2 inputs.

•

The Company estimated the terminal value growth rates of 2.5% for Polish trademarks and from 1.5% to 3.5% for Russian trademarks. These inputs were determined utilizing primarily Level 2 inputs.

Based upon the above analysis performed and due to the continued lower performance of certain Polish brands as compared to expectations for 2011 and subsequent years, the Company has determined that the fair market value of the trademarks related to these brands is below carrying value. The decrease in fair value primarily resulted from the very good performance of Żubrówka Biała brand, which cannibalized the performance of other brands, mainly Bols Vodka, the underperformance of which was most significant.

As a result the Company recorded an impairment charge on the trademarks value of $127.7 million during the third quarter of 2011 using the exchange rates as of September 30, 2011.

Impairment test on trademarks performed as of December 31, 2011

At December 31, 2011, the Company performed its annual impairment test of trademarks, and in order to support its value the Company calculated the fair value of trademarks using a discounted cash flow approach based on the following assumptions:

•

Risk free rates for Poland, Russia and Hungary used for calculation of discount rate were based on the yield of long term bonds denominated in US dollars issued by Polish, Russian and Hungarian governments as of December 31, 2011. When estimating discount rates to be used for the calculation we have taken into account current market conditions in Poland, Russia and Hungary separately. As a result of our assumptions and calculations, the following discount rates of 9.54%, 11.03% and 12.27% for Poland, Russia and Hungary, respectively have been determined. These inputs were determined utilizing primarily Level 1 inputs.

•

The Company estimated the growth rates in projecting cash flows for each of our trademarks separately, based on five year plan related to each trademark. These inputs were determined utilizing primarily Level 2 inputs.

•

The Company estimated the terminal value growth rates of 2.5% for Polish trademarks, from 1.50% to 3.25% for Russian trademarks and at 2.7% in relation to Hungarian trademark. These inputs were determined utilizing primarily Level 2 inputs.

Based upon the above analysis performed, the Company has determined that the fair market value of the trademarks is above its carrying value and no impairment charge was recorded as a result of the test performed as of December 31, 2011.

The change in the recorded book value of trademarks between December 31, 2011 and December 31, 2010 resulted mainly from the recognized impairment charge during the year described above, acquisition of the Kauffman Vodka trademark for $17.5 million and foreign exchange translation differences of $59.6 million caused by depreciation of the Polish zloty and Russian ruble against the U.S. dollar.