Page 331 - 2012 Annual Report

331
VIVENDI l 2012 l Annual Report
FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS – STATUTORY AUDITORS’ REPORT ON THE
CONSOLIDATED FINANCIAL STATEMENTS – STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS –
STATUTORY FINANCIAL STATEMENTS 4
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IV - VIVENDI SA 2012 STATUTORY FINANCIAL STATEMENTS
3. NOTES TO THE 2012 STATUTORY FINANCIAL STATEMENTS
Note 1 Accounting Rules and Methods
1.9. EMPLOYEE BENEFIT PLANS
The provision recorded for obligations in relation to employee benefit plans
includes all Vivendi employee benefit plans, i.e., retirement/termination
payments, pensions and supplemental pensions. It is calculated as the
difference between the value of the actuarial obligations and that of plan
assets, net of actuarial gains and losses and unrecognized past service
costs.
The actuarial obligation is calculated using the projected unit credit
method (each activity period generates additional entitlement). Actuarial
gains and losses are recognized using the “corridor method”. This
consists of recording, in the profit or loss account for the relevant period,
the amortization calculated by dividing the portion of actuarial gains and
losses which exceeds the greater of 10% of (i) the obligation or (ii) the
fair value of the assets of the plans as of the beginning of the fiscal year,
by the average remaining working life expectancy of the beneficiaries.
1.10. FOREIGN CURRENCY-DENOMINATED TRANSACTIONS
Foreign currency-denominated income and expense items are translated
using average monthly rates or, as applicable, using the exchange rate
negotiated during specific transactions.
Foreign currency-denominated borrowings, loans, receivables, payables,
marketable securities and cash balances are translated at the exchange
rates applicable on the accounting closing date (PCG Art. 342-5).
Unrealized gains and losses on translation of foreign currency borrowings,
loans, receivables and payables, using exchange rates prevailing on the
accounting closing date, are recorded in the Statement of Financial
Position in Unrealized foreign exchange gains and losses, except
where they offset income and expenses recognized on certain hedging
transactions (please see below, “Derivative financial instruments”). A
provision for foreign exchange losses is recorded in respect of unhedged
and unrealized exchange losses (PCG Art. 342-5).
Unrealized foreign exchange gains and/or losses on cash balances and
foreign currency current accounts (similar to cash balances under PCG
Art. 342-7) on the accounting closing date are recorded immediately as
foreign exchange gains and/or losses.
1.11. DERIVATIVE FINANCIAL INSTRUMENTS
Vivendi uses derivative financial instruments to (i) reduce its exposure
to market risks associated with interest and foreign exchange rate
fluctuations, and (ii) secure the value of certain financial assets. These
instruments are traded over-the-counter with highly-rated counterparties.
Loans, borrowings, receivables and payables covered by currency hedging
instruments that set the currency rate at maturity are recorded at hedge
rates and no foreign exchange difference is recognized.
Vivendi seeks to eliminate, for each currency, its financial exposure to
operational and transactional exchange risks. Vivendi therefore manages
foreign exchange positions that qualify as symmetrical to its receivables,
payables, loans, borrowings and current accounts and puts in place
the necessary derivative instruments to obtain, for each currency, a
symmetrical foreign currency hedging position.
Under symmetrical foreign currency hedging positions, unrealized gains
and losses arising from the revaluation of loans, borrowings, receivables
and payables are hedged by derivative instruments, or through current
accounts in foreign currencies. These hedging positions are recognized
directly in the Statement of Earnings and offset income and expenses
generated either during the realization of the hedging instruments or upon
their re-evaluation at the accounting closing date.
Unrealized capital gains on derivative instruments that do not qualify for
hedge accounting are not recognized. Conversely, a provision is recorded
in respect of unrealized capital losses on these derivative instruments.
1.12. INDIVIDUAL TRAINING ENTITLEMENT
Pursuant to Opinion 2004 F of the Emergency Committee of the French
National Accounting Board (CNC), Vivendi did not record a provision for
individual training entitlement as of year-end 2012.
The company-wide agreement entered into in May 2006 provides for
a number of 14 training hours in 2004 and 20 training hours each year
thereafter (up to a maximum of 120 hours) for each employee. As of year-
end 2012, a total of 20,268 training hours remained unused.