Virgin Media 2011 Annual Report Download - page 124

VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 9—Derivative Financial Instruments and Hedging Activities (continued)
On July 26, 2011 we settled the cross-currency interest rate swaps hedging the $550 million senior notes due
2016 and received cash of £65.5 million, which approximated the fair value of these swaps as of June 30, 2011.
The proceeds received upon settlement are classified as a financing activity in the consolidated statement of cash
flows.
Interest Rate Swaps—Hedging of Interest Rate Sensitive Obligations
As of December 31, 2011, 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. We have also entered into interest rate swap agreements to manage our exposure
to changes in the fair value of certain debt obligations due to interest rate fluctuations. The interest rate swaps
allow us to receive or pay interest based on three or six month LIBOR in exchange for payments or receipts of
interest at fixed rates.
The terms of our outstanding interest rate swap contracts at December 31, 2011 were as follows:
Hedged item/Maturity date Hedge type
Notional
amount
Weighted average
interest rate due from
counterparty
Weighted average
interest rate due to
counterparty
(in millions)
Senior credit facility
July 2012 to December 2015 .......... Economic £200.0 6 month LIBOR 2.91%
July 2012 to December 2015 .......... Economic 200.0 6 month LIBOR 2.87%
July 2012 to December 2015 .......... Economic 200.0 6 month LIBOR 2.79%
£650m senior secured notes due 2021
January 2021 ...................... Accounting £650.0 5.50% 6 month LIBOR
+1.84%
Other
March 2013 ....................... Economic £300.0 3 month LIBOR 3.28%
October 2013 ...................... Economic 300.0 1.86% 3 month LIBOR
September 2012 .................... Economic 600.0 3 month LIBOR 3.09%
September 2012 .................... Economic 600.0 1.07% 3 month LIBOR
Foreign Currency Forward Rate Contracts—Hedging Committed and Forecasted Transactions
As of December 31, 2011, we had outstanding foreign currency forward rate contracts to purchase U.S.
dollars and South African rand to hedge committed and forecasted purchases. The terms of our outstanding
foreign currency forward rate contracts at December 31, 2011 were as follows:
Hedged item/Maturity date Hedge type
Notional
amount due
from
counterparty
Notional
amount due to
counterparty
Weighted
average
exchange rate
(in millions) (in millions)
Committed and forecasted purchases
January 2012 to June 2012 .................... Accounting ZAR 39.0 £ 3.0 12.8588
January 2012 to June 2012 .................... Economic $ 72.0 £44.7 1.6099
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