registration document France Telecom 2009 - Orange.com

financial information concerning the issuer’s assets and liabilities, financial position and profits and losses
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NOTES TO THE ANNUAL FINANCIAL STATEMENTS OF FRANCE TELECOM S.A.
■ gains and losses arising on contracts designated as hedges
of identifi able fi rm commitments or identifi able future
transactions are deferred and recognized in the valuation of
the transaction upon its occurrence.
Some transactions which comply with France Telecom S.A.’s
hedging policy do not qualify for hedge accounting. These
transactions are measured as follows:
■ for transactions on organized markets, margin calls are
recorded immediately in the income statement;
■ net unrealized losses on over-the-counter instruments,
calculated on an instrument by instrument basis, are fully
provided for;
■ unrealized gains on over-the-counter instruments are not
recognized, in accordance with prudent accounting principles;
realized gains are recorded in the income statement when the
transaction is unwound.
2.2.16 Provisions
A provision is recognized when France Telecom S.A. has a
present obligation towards a third party and it is probable that
an outfl ow of resources embodying economic benefi ts will be
required to settle the obligation.
The obligation may be legal, regulatory or contractual or it may
represent a constructive obligation deriving from France Telecom
S.A.’s actions where, by an established pattern of past practice,
published policies have created a valid expectation on the part
of other parties that it will discharge certain responsibilities.
The amount of the provision corresponds to the amount of
resource outfl ow that will probably be required to settle the
obligation. If the amount of the obligation cannot be measured
reliably, no provision is recognized and the obligation is deemed
to be a contingent liability.
Information on contingent liabilities is disclosed in the notes to
the fi nancial statements. Contingent liabilities correspond to:
(i) probable obligations that are not recognized because their
existence will be confi rmed only by the occurrence or nonoccurrence
of one or more uncertain future events not wholly
within France Telecom S.A.’s control, or (ii) present obligations
arising from past events that are not recognized because it is
not probable that an outfl ow of resources embodying economic
benefi ts will be required to settle the obligation or because the
amount of the obligation cannot be measured with suffi cient
reliability.
2.2.17 Pensions and Other Long-Term
Employee Benefit Obligations
These benefi ts are offered through:
■ defi ned contribution plans: contributions are expensed in the
year in which the employee service is rendered; or
■ defi ned benefi t plans: the obligation is measured by the
projected unit credit method in line with CNC recommendation
no. 2003-R.01.
In accordance with this recommendation:
■ the obligation is measured on the basis of demographic
assumptions concerning staff turnover rates, mortality, etc.,
and fi nancial assumptions concerning rates of future salary
increases, infl ation rate, etc. The resulting obligation is then
discounted;
■ discount rates are determined on a plan by plan basis by
reference to yields on top-rated corporate bonds;
■ actuarial gains and losses related to post-employment
benefi ts are recognized in the income statement using the
corridor method, i.e. gains or losses exceeding 10% of the
higher of (i) the fair value of the obligation in respect of defi ned
benefi t plans and (ii) the fair value of plan assets, are deferred
over the remaining service lives of the employees concerned.
France Telecom S.A.’s defi ned benefi t plans are not generally
funded. Only one plan is funded and as its assets are listed
securities, their fair value is equal to their market value on the
reporting date.
Employee benefi ts include post-employment benefi ts
(essentially pension obligations), retirement bonuses and other
long-term benefi ts.
Post-employment benefits
Pension plan for French civil servants
Civil servants employed by France Telecom S.A. are covered by
the government-sponsored civil and military pension plan.
France Telecom S.A.’s obligation under the plan is limited to the
payment of annual contributions (law no. 96-660 dated July 26,
1996). Consequently, France Telecom has no obligation to fund
future defi cits of the pension plan covering its own civil servant
employees or any other public sector plans.
The civil servant pension plan is a defi ned contribution plan.
Retirement bonuses and other similar benefits
The retirement bonuses paid by France Telecom S.A. to its
employees, either as a lump sum or as an annuity, in an amount
determined by their fi nal salary and retirement age, can be
considered as a defi ned benefi t plan.
Other post-employment benefits
The benefi ts France Telecom S.A. offers retired employees,
such as telephones and canteen services, can be considered
as a defi ned benefi t plan.
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2009 REGISTRATION DOCUMENT / FRANCE TELECOM
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