Virgin Media 2006 Annual Report Download - page 168

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. Derivative Financial Instruments and Hedging Activities (Continued)
Foreign Currency Forward Rate Contracts—Forecasted Transactions
In December 2006, we also entered into a number of forward rate contracts to purchase U.S. dollars at various dates during 2007
in order to mitigate changes in the U.S. dollar to sterling exchange rate when purchasing goods and services from our suppliers. These
forward rate contracts total $127 million.
Net changes in the fair value of the foreign currency forward rate contracts recognized in gain (loss) from continuing operations
were as follows (in millions):
Year ended December 31,
2006 2005 2004
Net (loss)/gain in fair value of foreign currency forward rate contracts £ (28.9) £ 16.9 £ (33.7)
12. Fair Values of Financial Instruments
In estimating the fair value of our financial instruments, we used the following methods and assumptions:
Cash and cash equivalents, and restricted cash: The carrying amounts reported in the consolidated balance sheets approximate
fair value.
Marketable securities: The carrying amounts reported in the consolidated balance sheets approximate fair value.
Long term debt: The carrying amount of the senior credit facility approximates its fair value. The fair values of our other debt in
the following table are based on the quoted market prices.
The carrying amounts and fair values of our long term debt are as follows (in millions):
December 31, 2006 December 31, 2005
Carrying
Amount Fair Value Carrying Amount Fair Value
8.75% U.S. Dollar loan notes due 2014 to Virgin Media Finance PLC £ 217.0 £ 226.7 £ 247.3 £ 246.9
9.75% Sterling loan notes due 2014 to Virgin Media Finance PLC 375.0 398.6 375.0 386.3
8.75% Euro loan notes due 2014 to Virgin Media Finance PLC 151.6 173.2 155.0 179.9
9.125% U.S. Dollar senior notes due 2016 to Virgin Media Finance PLC 280.8 295.9 — —
Floating rate loan notes due 2012 to Virgin Media Finance PLC 51.1 51.1 58.2 58.2
Other loan notes due to affiliates 277.6 270.5 293.0 293.0
13. Employee Benefit Plans
Defined Benefit Plans
Certain of our subsidiaries operate defined benefit pension plans in the United Kingdom. The assets of the plans are held
separately from those of ourselves and are invested in specialized portfolios under the management of an investment group. The
pension cost is calculated using the projected unit method. Our policy is to fund amounts to the defined benefit plans necessary to
comply with the funding requirements
F−89
Source: VIRGIN MEDIA INVESTM, 10−K, March 01, 2007