Virgin Media 2009 Annual Report Download - page 194

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 10—Derivative Financial Instruments and Hedging Activities (Continued)
Interest Rate Swaps—Hedging of Interest Rate Sensitive Obligations
As of December 31, 2009, we had outstanding interest rate swap agreements to manage the
exposure to variability in future cash flows on the interest payments associated with our senior credit
facility, which accrue at variable rates based on LIBOR. The interest rate swaps allow us to receive
interest based on three month LIBOR in exchange for payments of interest at fixed rates.
The terms of our outstanding interest rate swap contracts at December 31, 2009 were as follows:
Weighted average Weighted average
Notional interest rate due interest rate due
Hedged item/Maturity date Hedge type amount from counterparty to counterparty
(in millions)
Senior credit facility
April 2010 ..................... Accounting £2,400.0 3 month LIBOR 2.31%
April 2010 ..................... Economic 600.0 3 month LIBOR 1.66%
April 2010 to April 2011 .......... Accounting 200.0 3 month LIBOR 2.58%
April 2010 to September 2012 ...... Accounting 1,300.0 3 month LIBOR 3.07%
April 2010 to March 2013 ......... Accounting 300.0 3 month LIBOR 3.28%
Foreign Currency Forward Rate Contracts—Hedging Committed and Forecasted Transactions
As of December 31, 2009, we had outstanding foreign currency forward rate contracts to purchase
U.S. dollars, euros and South African rand to hedge committed and forecasted purchases. The terms of
our outstanding foreign currency forward rate contracts at December 31, 2009 were as follows:
Notional amount Notional amount Weighted
due from due to average exchange
Hedged item/Maturity date Hedge type counterparty counterparty rate
(in millions) (in millions)
Commited and forecasted purchases
January 2010 to December 2010 ..... Economic $ 140.4 £ 87.3 1.6079
March 2010 to December 2010 ...... Accounting $ 11.3 £ 7.2 1.5730
January 2010 ................... Accounting A0.2 £ 0.2 1.1250
January 2010 to June 2010 ......... Accounting ZAR 26.1 £ 2.0 13.0024
Cash Flow Hedges
For derivative instruments that are designated and qualify as cash flow hedges, the effective
portion of the gain or loss on the derivative is reported as a component of other comprehensive income
and reclassified into earnings in the same period or periods during which the hedged transactions affect
earnings. In our consolidated statement of cash flows, we recognize the cash flows resulting from
derivative contracts that are treated as Accounting Hedges in the same category where the cash flows
from the underlying exposure are recognized. All other cash flows from derivative contracts are
recognized as operating activities in the consolidated statement of cash flows.
Gains or losses representing either hedge ineffectiveness or hedge components excluded from the
assessment of effectiveness are recognized as gains or losses on derivative instruments in the statement
of operations in the period in which they occur. During the year ended December 31, 2009, we
recognized a loss totalling £0.6 million, relating to ineffectiveness. The following tables present the
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