registration document France Telecom 2009 - Orange.com

20 CONSOLIDATED
financial information concerning the issuer’s assets and liabilities, financial position and profits and losses
STATEMENTS
In the limited number of cases (request for individual training
leave, redundancy or resignation) where these costs cannot
be considered as remuneration of future services, the resulting
short-term obligation is provided for as soon as its settlement
becomes probable or certain.
2.20 Share-based compensation
The fair value of stock-options, employee shareholding plans
and bonus shares concerning the shares of France Telecom or
its subsidiaries is determined on the grant date.
The Group considers that the grant date is the date when the
main terms of the offer are announced to the employees, in
accordance with the CNC communication dated December 21,
2004 on employee share ownership plans (Plans d’Epargne
Entreprise - PEE).
If applicable, a non-transferability discount is estimated by
valuing the cost of a hedging strategy combining the forward
sale of the non-transferable shares and the purchase of an
equivalent number of transferable shares for cash, fi nanced by
borrowings, using a valuation model based on market data.
Employee shareholding plan
Following the sale by the French State of a portion of France
Telecom’s capital, preferred subscription rights must be
awarded to the Group’s current and former employees, in
accordance with Article 11 of the 1986 French Privatization Act.
Compensation cost is estimated based on fair value at grant
date of the shares awarded. As no vesting period applies, the
amount is expensed directly against equity.
Other share-based payments
The fair value of stock-options and bonus shares is generally
determined by reference to the exercise price, the life of the
option, the current price of the underlying shares at the grant
date, the expected share price volatility, expected dividends,
and the risk-free interest rate over the options’ life. Vesting
conditions other than market conditions are not part of the fair
value assessment but of the grant assumptions.
The amount so determined is recognized in labour expenses on
a straight-line basis over the vesting period against:
■ employee benefi t liabilities for cash-settled plans, revalued
against profi t or loss at each year-end; and
■ equity for equity-settled plans.
2.21 Treasury shares
Treasury shares are recorded as a deduction from equity, at
cost. When shares are sold out of treasury shares, the resulting
profi t or loss is recorded in equity net of tax.
NOTE 3
Main acquisitions, disposals and changes in scope of consolidation
Year ended December 31, 2009
Main acquisitions
FT España
During 2009, through successive purchases, France Telecom
acquired an additional 18.36% stake in FT España.
On April 29, 2009, France Telecom acquired an additional
18.23% stake in FT España, thereby increasing its shareholding
to 99.85%. The minority shareholders agreed to terminate all
undertakings between the parties and dispose of their interest
for 1,379 million euros. According to the agreement, the price
guarantee that was accounted for 810 million euros as of
December 31, 2008 was extinguished. The goodwill amounting
to 584 million euros mainly consists of the fair value of the
acquired shares.
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2009 REGISTRATION DOCUMENT / FRANCE TELECOM