Virgin Media 2006 Annual Report Download - page 48

as a discontinued operation. Therefore, the results of operations of the Broadcast operations have been excluded from the components
of loss from continuing operations and the assets and liabilities of the Broadcast operations have been reported as assets held−for−sale
and liabilities of discontinued operations, respectively, for all periods presented.
We operated our business as a debtor−in possession subject to the jurisdiction of the Bankruptcy Court beginning on May 8,
2002, the date that we, NTL Europe and certain of our and NTL Europe’s subsidiaries filed the Plan under Chapter 11 of the U.S.
Bankruptcy Code, until January 10, 2003. Accordingly, we have prepared our consolidated financial statements in accordance with
SOP 90−7.
Upon emergence from Chapter 11 reorganization and in accordance with the Plan, all of our outstanding public notes were
canceled other than the notes issued by Diamond Holdings Limited and NTL (Triangle) LLC, and we acquired all of the outstanding
public notes of Diamond Cable Communications Limited. In connection with our emergence from Chapter 11 reorganization, some of
our subsidiaries and we issued $558.2 million aggregate principal amount at maturity of 19% senior secured notes due 2010, or Exit
Notes, on January 10, 2003. Initial purchasers of our Exit Notes also purchased 500,000 shares of our common stock on that date. The
gross proceeds from the sale of the Exit Notes and such shares totaled $500.0 million, or £310.7 million.
We adopted fresh−start reporting upon our emergence from Chapter 11 reorganization in accordance with SOP 90−7. For
financial reporting purposes, the effects of the completion of the Plan as well as adjustments for fresh−start reporting have been
recorded as of January 1, 2003. Pursuant to fresh−start reporting, a new entity was deemed to have been created for financial reporting
purposes. The carrying values of our assets were adjusted to their reorganization values, which are equivalent to their estimated fair
values at January 1, 2003. The carrying values of our liabilities were adjusted to their present values at January 1, 2003. The term
“Predecessor Company” refers to our subsidiaries and us for periods prior to and including December 31, 2002. The term
“Reorganized Company” refers to our subsidiaries and us for periods subsequent to January 1, 2003. The effects of the completion of
the Plan as well as adjustments for fresh−start reporting recorded as of January 1, 2003 are Predecessor Company transactions. All
other results of operations on January 1, 2003 are Reorganized Company transactions.
On November 17, 2003, we completed a rights offering, pursuant to which 35,853,465 shares of our common stock were issued.
In connection with the rights offering, we received gross proceeds of $1,434 million, or £846.0 million. From the net proceeds of
$1,367 million, or £806.5 million, we repaid in full all obligations under our Exit Notes and, together with cash on hand, our working
capital facility. In addition, we used part of the net proceeds as inter−company funding to one of our subsidiaries and the balance for
general corporate purposes.
We have a number of stock−based employee compensation plans. Effective January 1, 2003, we adopted the fair value
recognition provisions of FASB Statement No. 123, Accounting for Stock−Based Compensation, or FAS 123. We selected the
prospective method of adoption permitted by FASB Statement No. 148, Accounting for Stock−Based Compensation—Transition and
Disclosure, or FAS 148. Accordingly, the recognition provisions will be applied to all employee awards granted, modified or settled
after January 1, 2003. In the year ended December 31, 2006, we recognized £36.7 million of stock−based compensation and in the
year ended December 31, 2005, we recognized £9.8 million of stock−based compensation.
Pursuant to SOP 90−7, beginning on May 8, 2002 we ceased accruing interest expense on some of our pre−petition obligations.
Our reported interest expense in 2002 excludes £429.4 million of contractual interest for the period from May 8, 2002 to
December 31, 2002. Also in 2002, recapitalization expenses were £101.8 million. Recapitalization expenses include all transactions
incurred as a result of our Chapter 11 reorganization. Recapitalization expenses include £24.1 million for employee retention related to
substantially all of our U.K. employees and £77.7 million for financial advisory, legal, accounting and consulting costs.
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Source: VIRGIN MEDIA INVESTM, 10−K, March 01, 2007