Annual Review 2012 - Luxottica

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ANNUAL REPORT 2012
b) utilization of valuation techniques that are primarily based on observable market
prices; and
c) utilization of valuation techniques that are primarily based on non-observable market
prices.
The Group determined the fair value of the derivatives existing on December 31, 2012
through valuation techniques which are commonly used for instruments similar to those
traded by the Group. The models applied to value the instruments are based on a
calculation obtained from the Bloomberg information service. The input data used in these
models are based on observable market prices (the Euro and USD interest rate curves as
well as official exchange rates on the date of valuation) obtained from Bloomberg.
As of January 1, 2009, the Group had adopted the amendments to IFRS 7 for financial
instruments which are valued at fair value. The amendments to IFRS 7 refer to valuation
hierarchy techniques which are based on three levels:
• Level 1: Inputs are quoted prices in an active market for identical assets or liabilities;
• Level 2: Inputs used in the valuations, other than the prices listed in Level 1, are
observable for each financial asset or liability, both directly (prices) and indirectly
(derived from prices); and
• Level 3: Unobservable inputs used when observable inputs are not available in
situations where there is little, if any, market activity for the asset or liability.
The following table summarizes the financial assets and liabilities of the Group valued at
fair value:
Fair Value Measurements at Reporting Date Using:
Classification within the Consolidated December 31,
(thousands of Euro) Statement of Financial Position
2012
Level 1 Level 2 Level 3
Foreign Exchange Contracts Other current assets 6,048 - 6,048 -
Interest Rate Derivatives Other non-current liabilities - - -
Foreign Exchange Contracts
and Interest Rate Derivatives Other current liabilities 1,119 - 1,119 -
Fair Value Measurements at Reporting Date Using:
Classification within the Consolidated December 31,
(thousands of Euro) Statement of Financial Position
2011
Level 1 Level 2 Level 3
Foreign Exchange Contracts Other current assets 668 - 668 -
Interest Rate Derivatives Other non-current liabilities 8,550 - 8,550 -
Foreign Exchange Contracts
and Interest Rate Derivatives Other current liabilities 16,058 - 16,058 -
As of December 31, 2012 and 2011, the Group did not have any Level 3 fair value
measurements.
The Group maintains policies and procedures with the aim of valuing the fair value of
assets and liabilities using the best and most relevant data available.