Virgin Media 2011 Annual Report Download - page 203

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
VIRGIN MEDIA INVESTMENTS LIMITED AND SUBSIDIARIES
COMBINED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 8—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 losses that would be reclassified from other comprehensive income (loss) to earnings would be £0.0
million and £2.9 million relating to interest rate swaps and cross-currency interest rate swaps, respectively, and
pre-tax gains 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 9—Employee Benefit Plans
Defined Benefit Plans
Certain of our subsidiaries operate defined benefit pension plans in the U.K. The assets of the plans are held
separately from those of ourselves and are invested in specialized portfolios under the management of investment
groups. 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 as prescribed by the laws and
regulations in the U.K. Our defined benefit pension plans use a measurement date of December 31.
Employer Contributions
For the year ended December 31, 2011, we contributed £17.5 million to our pension plans. We anticipate
contributing a total of £17.7 million to fund our pension plans in 2012.
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