Virgin Media 2010 Annual Report Download - page 130

VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 10—Derivative Financial Instruments and Hedging Activities (continued)
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, 2010, we recognized a gain
totaling £0.5 million, relating to ineffectiveness. The following table presents the effective amount of gain or
(loss) recognized in other comprehensive income and amounts reclassified to earnings during the year ended
December 31, 2010 (in millions):
Total
Interest rate
swaps
Cross-currency
interest rate
swaps
Forward foreign
exchange
contracts
Tax
Effect
Balance at December 31, 2009 ............... £(55.3) £(32.4) £ (6.9) £— £(16.0)
Amounts recognized in other comprehensive
income ................................ 104.3 8.0 95.8 0.5 —
Amounts reclassified as a result of cash flow
hedge discontinuance .................... 32.4 32.4 — — —
Amounts reclassified to earnings impacting:
Foreign exchange losses ................ (67.7) — (67.7) — —
Interest expense ....................... (4.6) — (4.6) — —
Operating costs ....................... (0.4) — — (0.4) —
Tax effect recognized ...................... (17.9) — — — (17.9)
Balance at December 31, 2010 ............... £ (9.2) £ 8.0 £ 16.6 £ 0.1 £(33.9)
Assuming no change in interest rates or foreign exchange rates for the next twelve months, the amount of
pre-tax losses that would be reclassified from other comprehensive income to earnings would be nil, £1.9 million
and nil relating to interest rate swaps, cross-currency interest rate swaps and forward foreign exchange contracts,
respectively.
Note 11—Stock-Based Compensation Plans
At December 31, 2010, we had a number of stock-based compensation plans, which are described below. In
the years ended December 31, 2010 and December 31, 2009, the compensation cost that has been charged against
income for these plans was £29.4 million and £19.4 million, respectively. All our stock-based awards granted
under our long term incentive plans or individual employment agreements are issued under our stock incentive
plans or the Virgin Media Sharesave Plan which have been approved by our stockholders.
Virgin Media Stock Incentive Plans
The Virgin Media Inc. stock incentive plans are intended to encourage Virgin Media stock ownership by
employees and directors so that they may acquire or increase their proprietary interest in our company, to
encourage such employees and directors to remain in our employ or service and to put forth maximum efforts for
the success of the business. To accomplish these purposes, the plans provide that we may grant incentive stock
options, nonqualified stock options, restricted stock, restricted stock units and stock awards.
Under the Virgin Media Inc. 2010 Stock Incentive Plan, options to purchase up to 29.0 million shares of our
common stock may be granted from time to time to certain of our employees. Accordingly, we have reserved
29.0 million shares of common stock for issuance under the Virgin Media Inc. 2010 Stock Incentive Plan.
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