Virgin Media 2011 Annual Report Download - page 127

VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 9—Derivative Financial Instruments and Hedging Activities (continued)
Assuming no change in interest rates or foreign exchange rates for the next twelve months, the amount of
pre-tax income or losses that would be reclassified from other comprehensive income (loss) to earnings would be
income of £1.6 million relating to interest rate swaps, losses of £2.9 million relating to cross-currency interest
rate swaps, and income of £0.1 million relating to forward foreign exchange contracts.
Fair Value Hedges
For derivative instruments that are designated and qualify as fair value accounting hedges, the gain or loss
on the derivative is reported in earnings along with offsetting changes in the value of the hedged debt obligations
due to changes in the hedged risks. In our consolidated balance sheet, changes in the value of the hedged debt
obligations due to changes in the hedged risks are included as adjustments to the carrying value of the debt. 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 years ended December 31, 2011, 2010 and 2009, we
recognized ineffectiveness totaling £3.7 million, £0.0 million and £0.0 million, respectively.
Note 10—Stock-Based Compensation Plans
At December 31, 2011, we had a number of stock-based compensation plans, which are described below. In
the years ended December 31, 2011, 2010 and 2009, the compensation cost that has been charged against income
for these plans was £22.5 million, £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, performance share awards and stock
awards.
Under the Virgin Media Inc. 2011 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. 2011 Stock Incentive Plan.
Virgin Media Sharesave Plan
The Virgin Media Sharesave Plan is a broad based stock option arrangement which enables eligible
employees to receive options to purchase shares of our common stock at a discount. Employees are invited to
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