Virgin Media 2006 Annual Report Download - page 121

VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. Income Taxes
The (benefit)/expense for income taxes consists of the following (in millions):
Year ended December 31,
2006 2005 2004
Current:
Federal £ (0.5) £ 1.4 £ 0.1
State and local — (1.3) 1.3
Foreign (2.7) — —
Total current (3.2) 0.1 1.4
Deferred:
Federal (8.6) 18.7 3.6
Foreign — — —
Total deferred (8.6) 18.7 3.6
£ (11.8) £ 18.8 £ 5.0
There are significant current year losses in the U.K. and the U.S. The current federal tax benefit relates to a reversal of a prior
year provision. The 2006 foreign tax benefit relates to amounts receivable in respect of the surrender to equity investments of U.K. tax
losses arising in the current period. The 2006 federal deferred tax benefit relates to the release of a deferred tax liability set up in 2005.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred tax liabilities and
assets are as follows (in millions):
December 31,
2006 2005
Deferred tax liabilities:
Intangibles £ 262.2 £ 70.1
Equity investments 77.0 —
Unrealized foreign exchange differences 0.7 16.5
Total deferred tax liabilities 339.9 86.6
Deferred tax assets:
Net operating losses 1,121.1 876.3
Capital losses 3,655.0 5,228.1
Depreciation and amortization 2,055.4 1,330.6
Accrued expenses 18.9 6.3
Other 119.9 45.6
Total deferred tax assets 6,970.3 7,486.9
Valuation allowance for deferred tax assets (6,707.6) (7,409.5)
Net deferred tax assets 262.7 77.4
Net deferred tax liabilities £ 77.2 £ 9.2
A valuation allowance is recorded to reduce the deferred tax asset to an amount that is more likely than not to be realized. To the
extent that the portion of the valuation allowance that existed at January 10, 2003 is reduced, the benefit would reduce excess
reorganization value, then reduce other intangible assets
F−42
Source: VIRGIN MEDIA INVESTM, 10−K, March 01, 2007